Industry Voices Respond to Tariff Policy Changes

Glass Magazine
June 10, 2019
COMMERCIAL, FABRICATION

On May 10, the United States raised tariffs on an estimated $200 billion in Chinese imports, from 10 percent to 25 percent. The Trump administration had initially imposed 10 percent tariffs on the items in September, with the new tariffs going into effect during the administrations ongoing trade talks with China.

A little over a week later, the U.S. lifted tariffs on aluminum and steel from Mexico and Canada, with the agreement by those countries’ governments that they would implement stricter measures involving the importing of Chinese metals. On June 3, President Trump said he would impose new five percent tariffs on all Mexican goods, a situation which is still developing.

In light of the quick succession of tariff turnarounds, Glass Magazine asked industry members to comment on the impact of tariffs on the industry, the effect of the recent tariff increases, and the imprint they may leave on it in future. All comments were received on or before May 22.

Q. How have trade tariffs affected your organization?

“As soon as USA/China trade tensions initially started in early 2018, we established an internal task force led by one of our top executives with the charter to monitor the situation and to take actions necessary to mitigate cost exposure for our company and our customers. Based on the work of our task force and due in large part to our vertically integrated manufacturing strategy where we produce virtually everything we make in the state of Georgia, USA, we have been able to manage the tariffs thus far without any negative impact to our customers.” – Oliver Stepe, president, YKK AP America

“Any impacts to our members’ ability to be profitable in their businesses affects AAMA in a similar manner. We are concerned for our members who rely on free trade to prosper. For many of our members who operate in both the U.S. and Canada, lifting tariffs between these countries is a positive development that mitigates federal trade policy influence over the decisions they make to successfully operate their businesses.” – Janice Yglesias, executive director, American Architectural Manufacturers Association

“The tariffs have been an assault on the profitability of our industry. By artificially inflating the price of our key material input, they have transferred profits from us and our customers to the U.S. Treasury in the form of tariffs.” – Tim Salach, vice president of finance, Tubelite Inc.

Q. What are your reactions to the most recent changes to tariff policy [the imposition of 25 percent tariffs on Chinese goods, and the lifting of tariffs on Mexico and Canada]?

“The potentially far-reaching impact of the trade war with China will be felt to varying degrees by many fenestration industry companies and the recent tariff increase will only exacerbate that. However, it’s promising to see that the tariffs for our North American partners and allies have been lifted, especially given the fluidity of fenestration commerce between the U.S. and Canada since the 2005 harmonization of the North American Fenestration Standard (NAFS).” – Yglesias

“We will effectively be transferring wealth from American consumers to Canadian smelters rather than to the U.S. Treasury. As long as tariffs remain in place on other countries, Canadian smelters will continue collecting prices close to where they have been since the tariffs were put in place. But now, the Canadians will no longer have to remit their price premium to the U.S. Treasury in the form of a tariff; the price premium they are collecting from American consumers simply becomes their profit.” – Salach

Q. As they stand right now, what are your predictions for how tariffs will impact current and future economic growth?

“While we remain bullish on our stance to protect customers from trade policy challenges, we are hopeful that the United States and China can reach a mutually agreeable solution to eliminate the tariffs all together in the near future. Increasing costs in any form, and especially artificial inflation of material costs, places strain on other more productive ways we can use financial resources to benefit our employees, customers, and communities, and to grow the business.” –Stepe

“The impact of tariffs is a domino effect that will impact the industry and the country for many years to come. It’s yet to be seen if that will be a long-term negative or positive effect.” – Yglesias

“The most important thing to remember about tariffs is that the wins are concentrated and the losses are widely spread. Despite the upside to the specific American companies benefitting from the tariffs, the tariffs will be a drag on the broader economy. And of course, the retaliatory tariffs will continue to punish the targeted American exporters.” – Salach