WXXI AM News

Trade Tensions And Threat Of Tariffs Has Led To Lots Of Uncertainty

Jun 12, 2018
Originally published on June 15, 2018 3:07 pm

The Trump administration's mixed signals on implementing tariffs is causing uncertainty for many businesses whose costs could rise if tariffs are imposed. Delaying decisions about hiring and signing contracts could hurt not only the individual businesses, but the economy as a whole.

Update: On June 15, Lucerne International CEO Mary Buchzeiger said she had been notified that the auto door hinges manufactured by her company had been removed from the Trump administration's list of goods that would be subject to a 25 percent tariff.

Copyright 2018 NPR. To see more, visit http://www.npr.org/.

AUDIE CORNISH, HOST:

Despite all the threats and bluster between President Trump and American trading partners, at this point, less than $50 billion in punitive tariffs have actually been imposed. It's a tiny fraction of global trade, but that number could double on Friday. The U.S. is scheduled to announce another $50 billion in tariffs on Chinese goods. The uncertainty that all of these tensions and threats are causing are already very real. NPR's John Ydstie has been getting some reaction.

MARY BUCHZEIGER: It's just all very nerve-wracking because we don't know what the future holds for us.

JOHN YDSTIE, BYLINE: Mary Buchzeiger was in Washington about a month ago pleading with the Trump administration for a reprieve for her small auto parts company, Lucerne International based in Michigan. One of the company's main products, the door hinges on Jeep Wranglers, is in the trade war crosshairs. Lucerne manufactures those hinges in China, and the administration is threatening to slap a 25 percent tariff on the part. That could crush Buchzeiger's company. And the uncertainty is already making business decisions difficult on things like hiring, investment and signing new contracts.

BUCHZEIGER: At this point in time, we can't put hiring freezes on. We have to go on business as usual because we have to plan for those things. But, ultimately, it could be detrimental to our entire business here in the U.S.

YDSTIE: The uncertainty is also affecting U.S. agriculture. We reached North Dakota corn and soybean farmer Kevin Skunes in his office on a rainy day.

KEVIN SKUNES: Watching the corn grow today, it's too wet to be out spraying, a little bit too wet to haul corn.

YDSTIE: Skunes is president of the National Corn Growers Association. He still has corn from last year's crop to sell, but he's hesitating because the talk about tariffs has pushed prices down.

SKUNES: We've probably seen, you know, impacts in soybeans, corn and wheat, so I think there's just a lot of uncertainty in the marketplace.

YDSTIE: It's a difficult situation for farmers who are already facing a tough year. The USDA is predicting 2018 will bring the lowest net farm income in 16 years. Among companies clearly being harmed are U.S. firms that use steel and aluminum to make products ranging from soup cans to auto parts. Brad Murray is in charge of buying raw materials for the Indiana-based auto parts maker Mursix.

BRAD MURRAY: It has gotten to the point where it has darn near wiped out our profits.

YDSTIE: Murray says the cost of imported aluminum is up 10 percent because of the Trump tariffs. And he says that 25 percent tariff on imported steel has allowed U.S. steel producers to raise their prices by that amount, too. So steel users like his company have no good options. Murray supports getting tough with unfair traders, but he's worried.

MURRAY: On the short term, I think we can get through this. Long term, if these things don't work out and we've totally gone down the wrong path, then I think you're going to see that it's going to be very adverse.

YDSTIE: Trade economist Chad Bown of the Peterson Institute for International Economics says so far the damage to the U.S. economy has been minimal. But he says that could change.

CHAD BOWN: There's another round of tariffs that could be imposed, you know, as of the end of this week, June 15, this $50 billion on China.

YDSTIE: China says it will retaliate. In addition, the EU, Canada and Mexico are about to respond to Trump's steel and aluminum tariffs with their own tariffs on a range of U.S. products. Bown says unless the trade disputes are resolved, the tariff fight will boost costs for U.S. businesses and consumers and become a drag on the economy. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.