Effects of a trade war sparked by the Trump administration’s recent tariffs on various imported materials and products continue to unfold.
The U.S. imposed tariffs on steel, aluminum and other goods from Canada, Mexico and the European Union in early June and on China in early July. These countries imposed tariffs on U.S. goods in retaliation.
The impact of steel and aluminum tariffs is particularly strong and far-reaching. Media reports say there is little foreign steel and aluminum coming into the U.S. now, allowing domestic producers to hike their prices.
Corey Sheets, co-owner of Meadows Mills Inc. in North Wilkesboro, said American steel manufacturers started raising prices when tariffs were simply mentioned. Plate steel prices are up 30 per cent and structural steel prices rose 20 per cent recently, he said.
Meadows Mills makes sawmills, agricultural implements, grain mills and other products, with mostly domestic sales currently. Sheets said the company’s sales are strong and costs may be leveling off.
“While there may be wisdom to the plan, because business is strong, for now there is only pain from higher costs resulting from the tariffs. I was always using domestic plate (steel). I am using the same domestic plate now and paying more,” said Sheets.
Tony Johnson, co-owner of Cutting Systems Inc. in Union Grove, said some American manufacturers of steel equipment components have taken advantage of the tariffs in the way Sheets described and some haven’t.
Johnston Casuals in North Wilkesboro buys steel for making contemporary steel furniture from Charlotte-based Nucor Corp. and was experiencing stable prices until about a month ago, said owner Joe Johnston.
Johnston said that since steel is a commodity, price increases due to tariffs on certain countries cause higher steel prices across the board. He said Johnston Casuals has seen double digit increases in steel prices.
Nucor CEO John Ferriola said recently that Nucor supports the tariffs to help “stop the flood of illegally subsidized and dumped steel imports into the U.S…. Tariffs send a strong message that dumping artificially cheap steel products into our market will no longer be tolerated.”
Mark Vitner, senior economist for Wells Fargo Securities in Charlotte, told the Charlotte Observer that steel producers like Nucor benefit as prices rise and win back market share lost to overseas producers.
According to media reports, tariffs on imported Canadian lumber and wood products boosted American timber and lumber industries. Canada has been accused of dumping subsidized, cheaper lumber into the U.S. market for years.
“It’s really too early to fully understand what the ramifications might be for North Carolina’s forest products exports in our current climate of trade tariffs and pending trade wars. The biggest impact so far has been imposed on other agricultural commodities,” said Clayton Altizer, a utilization forester with the N.C. Department of Agriculture & Consumer Services.
“Forest products have yet to appear on any list of banned products. However, it’s fair to say there is a lot of apprehension within the industry right now. China is North Carolina’s biggest trade partner (for the forest products industry) by a large margin. And U.S.-China trade relations are certainly contentious right now. If further tariffs are imposed, there’s likely a good chance forest products could be impacted.”
John Hatcher, executive vice president of the N.C. Forestry Association, agreed that it’s too early to full understand the impact of the tariffs on the forest products industry.
“Long-term, tariffs are not good for our country because they create distortions. The preference is to have free trade unless a country is accused of dumping,” said Hatcher.
People in the forest products industry in Wilkes say demand for timber and stumpage prices remain up locally.
There is growing concern about higher construction costs due to rising steel and wood prices. N.C. Home Builders Association said tariffs on Canadian lumber caused a $9,000 hike in the price of an average single family home.
Canada is a major source of newsprint—the paper on which newspaper are printed—and newsprint prices have skyrocketed since a 22-per-cent tariff was placed on newsprint imported from Canada. This led to layoffs at some newspapers.
U.S. auto manufacturers oppose the tariffs, although sales of American made autos are up due to tariffs on imports. There is concern about higher steel and aluminum prices upping domestic car prices and curtailing sales. USA Today estimated that the tariffs would add $4,000 to $5,000 to the average price of a car.
Last week, Trump agreed to delay tariffs on autos from European Union nations during a period of negotiations.
An adverse impact on North Carolina’s aircraft manufacturing industry, which includes the GE Aviation plant in West Jefferson, has also been cited.
A study by Trade Partnership Worldwide, a Washington, D.C.-based economic consulting firm, estimated that the tariffs would cause an overall net loss of 146,000 jobs due to contractors, manufacturers and other firms having to cut costs.
Americans can expect to pay more for craft beer due to tariffs on the aluminum used in cans, brewers say.
The U.S. Chamber of Commerce said that prior to the recent trade war, North Carolina exported products worth about $495 million to Canada annually, about $351 million to China, about $146 million to Europe and about $98 million to Mexico.
The U.S. Chamber said N.C. exports to Canada most vulnerable to a trade war are iron, non-alloy steel, dishwashing machines and fungicides.