U.S. Senator Ron Johnson derided the effects of President Donald Trump’s tariffs during a round-table discussion with a cross-section of Wisconsin companies on Monday, saying he was unsure what the administration hoped to accomplish with the policy.
During a discussion at the Milwaukee Federal Building, more than a dozen Wisconsin companies explained how trade disputes have driven up costs for cheese, soybeans, metal components and a range of other products. Many of the companies were small and mid-sized manufacturers or growers that export their products. Most, if not all, complained of being harmed by tariffs.
Conspicuously absent, though, were both steel and aluminum producers and various large employers out of Wisconsin. Various companies fitting those descriptions declined the invitation to attend for fear of retribution for speaking out against tariffs, Johnson said.
Johnson warned the U.S.’s new tariffs on steel and aluminum have not only cost manufacturers millions; they also could put a chill on a blitz of new construction this summer in Wisconsin. When asked about the new duties’ likely effects on the construction industry, Johnson said he was concerned customers will ultimately see rising costs. He spoke of a recent meeting with representatives of the Associated Builders and Contractors of Wisconsin, who told him rising lumber and steel costs had caused the price of what was once a $250,000 home to increase by 10 percent.
“It is already having an effect on construction,” Johnson said. “In the end, trade wars hurt consumers. I can’t point out enough: Tariff is just another name for a tax. It’s a tax on consumer products. The benefit being with a few industries, you know, that we’re trying to protect — that’s steel and aluminum producers. But it really affects jobs in steel-using and aluminum-using businesses as well as raising the cost to consumers.”
The U.S. has imposed a 25 percent tariff on steel imports and 10 percent on aluminum imports. China, the EU, Canada, Mexico and Turkey have retaliated in turn by placing duties of their own on more than $24 billion worth of American goods. The United States has meanwhile imposed separate tariffs, these set at 25 percent. on $34 billion worth of Chinese imports — most of which are industrial goods the Trump administration contends receive subsidies or other unfair support from Beijing. Once again, China has retaliated, this time with tariffs on $34 billion worth of U.S. products.
The tariffs’ effects are already showing up indices used to track the price of common construction materials. The cost of inputs to the construction industry increased by 9.6 percent on average from June 2017 to June 2018, according to the Bureau of Labor Statistics’ producer price index. Among the biggest price increases seen between June 2018 and June 2017 were those for aluminum-mill shapes, which rose 20 percent, and steel-mill products, which went up by 12.3 percent.
That increase could squeeze contractors; the price of new construction has only increased 4.3 percent.
Johnson said one of his biggest concerns about the Trump administration’s trade policies is the uncertainty that surrounds the use of tariffs. It’s unclear, he said, what the administration hopes to accomplish by imposing tariffs on other countries. He speculated, however, that one reason administration officials haven’t laid out a long-term tariff plan is that they’re anxious American companies would respond by moving overseas.
“If you can’t look out a number of years and know that you’ve got a certain tax environment, a certain regulatory environment … it’s very difficult to plan as a result,” Johnson said.
Although executives from many of the 15 companies that took part in the round table on Monday said the new tariffs would prove costly, one person in attendance went a bit further and said the duties had already forced the firm to put off millions of dollars worth of construction projects this year and would most likely do so again next year.
Cindy Brown, president of Chippewa Valley Bean, said she is concerned about the rising cost of two planned construction projects — a $3.5 million job this year and a $10 million project next year. The Menomonie-based grower and exporter kidney beans exports between 65 percent and 70 percent of its products. European tariffs on American goods have increased the cost of Chippewa Valley Bean Co.’s goods by $6 million, which could cause the company’s customers to look for kidney beans elsewhere.
Brown said the company’s farmers have found ways to compete against Chinese and South American companies that were undercutting of Chippewa Valley Bean’s prices. Tariffs, however, have derailed that work.
“Our farmers have been very efficient, and have done what they need to do to compete globally,” Brown said. “Unfortunately, these tariffs are not allowing them to do so.”