Tariff uncertainty hurts Great Lakes region

Date: Wednesday, May 8, 2019
Source: American Shipper

Speakers talked about the negative impact caused by the tariffs during a discussion co-hosted by Tariffs Hurt the Heartland and the Council of the Great Lakes Region.

“Uncertainty is a big deal,” said Tom Lix, founder and CEO of Cleveland Whiskey, during the town hall cohosted by Tariffs Hurt the Heartland and the Council of the Great Lakes Region. “It’s important that we trade among each other around the world. The idea that we would manipulate this and use this I believe as a political tool is just absurd, and it hurts a whole lot of people. From the workers at the very bottom to the larger companies, it is hurting this country.”

Mark Fisher, president and CEO of the Council of the Great Lakes Region, said the region, which consists of eight states, Ontario and Quebec, is a $6 trillion economy and has 7 million categorized small firms. The region is intertwined between the U.S. states and two Canadian provinces, he said, and is responsible for about 50% of the goods transported across the border.

The cumulative effects of both the U.S. tariffs and the retaliatory tariffs are having a negative impact on the region, Fisher said.

“When we look at the effects on this region at a time when the region is coming back from decades of undergrowth, underdevelopment, as we’re seeing that comeback and revival in the region, this is absolutely the wrong time to be putting any brakes on small business growth in the region like this,” Fisher said.

Lix said the uncertainty caused by the 25% tariffs imposed by the European Union on a $2.8 billion range of U.S. products, which includes Harley-Davidson motorcycles and bourbon, in retaliation for U.S. tariffs on European steel and aluminum severely damaged his export opportunities. Cleveland Whiskey’s exports to Europe were expected to account for about 20% of its business in 2018 after making up approximately 15% in 2017, but he said his company didn’t sell any bottles in Europe last year.   

“We’re not selling a single bottle overseas right now,” Lix said. “There should have been two or three more employees we’ve hired that aren’t here because we couldn’t afford to hire them. That’s the impact on a small business like us.”

Wilson said the steel and aluminum tariffs could exist “for some time,” which could have long-lasting impacts on the supply chain if small businesses are unable to afford domestic steel and aluminum or the tariffs. She said the Motor & Equipment Manufacturers Association told her the tariffs raised the price of domestic steel by almost 50% last year.

“You have to really think about what we’re doing to our smaller suppliers, to our small manufacturers and our small businesses, and are we weakening them in the long run and is that really going to help our economy develop in this country?” she said.   

Trade agreements, such as NAFTA and the United States-Mexico-Canada Agreement, are important for the region, Fisher said. The United States should participate in “modern trade deals with friends and allies” to help the region become more competitive internationally, he said.

“The trade policy needs to be reflective of the way global trade is organized and that is around multilateral agreements ... and really try to take advantage of those blocks and those platforms,” Fisher said. “I think the path ... for changing China’s practices and getting small businesses to be successful in the long run is through trade policy, is through engaging in global marketplace.”

He later added, “Time will tell whether the experience we’ve seen over the last couple of years will change that practice or not, but I think that’s how you get there.”

The town hall came one day after President Donald Trump tweeted that 10% tariffs across $200 billion worth of goods from China in yearly import value would increase to 25% on Friday. The elevated tariff, along with the existing duties on Chinese shipments and steel and aluminum, would decrease U.S. employment by 934,700 jobs and cost the average family of four $767 a year, according to a study released in February by the Trade Partnership.

The president also said $325 billion worth of untaxed goods from China will “shortly” be tariffed at 25%. Adding a 25% tariff on all remaining imports from China, plus Chinese retaliatory in addition to the base scenario would decrease U.S. jobs by 2.16 million and cost the average family of four $2,294 annually, according to the Trade Partnership study.

China announced Tuesday that Vice Premier Liu He will travel to Washington, D.C., for negotiations starting Thursday, The Wall Street Journal reported.

Wilson said during the town hall it is time to take a deep breath and see what happens during the negotiations. Lix, however, wasn’t as calm about the situation.

“I’m tired of taking a deep breath. It is time to stand up and say this is not right, we don’t accept this, this is impacting too many of us,” he said. “They are doing things that hurt our businesses, that hurt our livelihoods, that influence employment and profitability and all sorts of things and there’s no good reason for it.

“I’m not going to take a deep breath,” he continued. “I’m going to get upset about it and I’m going to complain to people and ... whether we’re talking to Washington or talking amongst ourselves or talking to governors and senators and representatives, it’s time to stop this. It’s crazy. Most people agree that it’s crazy. Let’s fix it. Let’s get rid of it.”


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