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Impacts of trade war hitting Wisconsin businesses
7/17/2018

Wisconsin manufacturing and agricultural business leaders during a Milwaukee hearing told U.S. Sen Ron Johnson they're already feeling economic damage from a trade war between the U.S. and Canada, China, the European Union and others.


Manufacturing representatives said yesterday they're seeing price hikes of between 35 percent and 40 percent on steel and aluminum raw materials from not only foreign sources but from domestic suppliers that have also raised prices due to increased demand.


Several participants noted ramping up domestic production takes a long time, and U.S. suppliers have not announced commitments to do so, partly due to the uncertainty over how long the tariffs will be in place.


Husco International CEO Austin Ramirez said tariffs have cost the company $1 million per month.


He said exports support 100 jobs in its U.S. operations, which are at risk because it would be more efficient to produce the products overseas to avoid tariffs.


Ramirez said if the company knew the tariffs were permanent, it could adjust operations accordingly.


"Today, business is frozen, because these tariffs might go away tomorrow; they might go away in two months; they might be permanent, and it really handcuffs us from restructuring our business for whatever the new reality might look like," Ramirez said.


GE Healthcare Vice President and General Counsel Healthcare Laura O'Donnell said the tariffs are increasing the costs of its products to overseas markets such as China, placing the company at a disadvantage to competitors not subject to tariffs.


Johnson noted GE Healthcare was the largest business to participate.


"I don't blame other large companies that just didn't want to show up because they fear reprisal, which is really disappointing," he said.


Not present at yesterday's hearing was a representative from Harley-Davidson, which faced harsh criticism from President Trump due to its decision to offshore some production to avoid retaliatory tariffs.


Waukesha Metal Products CEO Jeffrey Clark said the tariffs are putting pressure on the company to move more operations to Mexico to avoid them.


Doug Reigle, vice president of supply chain management for Regal Ware Inc. said the company is having difficulty having an order accepted in China because of uncertainty of what the final price will be once tariffs are applied.


Reigle said increased costs have made it less competitive on price with others who make similar products.


"The 'made in the USA' cache still means something, but there's a point where it doesn't," he said.


Agricultural representatives noted the tariffs are making their products less price competitive and may encourage other countries to boost their output of the same products to benefit from higher prices.


Chippewa Valley Bean Co. Inc. President Cindy Brown, which grows, processes and markets kidney beans, said that more than 65 percent of its products are exported, with 60 percent of that going to Europe. The 25 percent tariff from the European Union has raised costs by $6 million, she said, and customers are considering refusing shipments.


Uncertainty in the market, she said, has caused the company to cancel $3.5 million worth of construction projects for 2018 and and a $10 million to $15 million expansion project for 2019.


Brad Kremer of Hillcrest Family Farms, who's on the board of the American Soybean Association, said soybean prices have crashed, and so far soybean growers have seen a $250 million hit in Wisconsin and $7 billion nationally.


He said producers have spent decades developing overseas markets on the promise of quality and reliability, which are now at risk due to the tariffs.


"We're afraid we may have lost these markets forever," Kremer said


He said the impact also affects equipment purchases.


"Farmers are not going to buy this year, guys; I'm telling you that right now," Kremer said. "Our checkbooks are closed."


Speaking with reporters afterward, Johnson knocked tariffs, saying they benefit the industries they are trying to protect, but harm others and raise consumers' costs.


"They're not good things. President Trump says he'd like a tariff-free world. That would be a good thing," Johnson said. "I've just got a real problem with the way he's approaching trying to achieve that goal." †††


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