Tariff impacts felt close to home

Anxious feelings locally about possibility of trade war over Trump’s decision

A possible trade war erupting from President Donald Trump’s recent decision to impose tariffs on steel and aluminum imports could be felt close to home among Columbus manufacturers.

A recent survey by the Greater Columbus Economic Development Corp. shows that 33 of 47 manufacturers — or 70 percent — who responded are exporting products at some level, said Jason Hester, president of the organization.

An additional three engineering service companies and two distribution firms also have exports, for a total of 38 firms in Columbus who serve markets outside the United States, he said.

Just over a year ago, Columbus was ranked as the metro area with the most to lose in the United States should Trump move forward with promises to rip up trade agreements and impose the tariffs on steel and aluminum imported from other countries, according to The Brookings Institution’s Metropolitan Policy program.

The study ranked metro areas by their exports as a percentage of their local gross domestic product, the broadest measure of economic output. Besides Columbus, four other Indiana metros — Elkhart-Goshen, Kokomo and Lafayette-West Lafayette — made the U.S. Top 10 list.

Determining which Columbus companies might be affected the most if a trade war erupts is one piece of the discussion, Hester said. The other side is which employers who are using imported steel and aluminum might find their prices going up from suppliers in retaliation for the Trump tariffs, he said.

Earlier this month, Trump announced plans for a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, a move that has received push back from not only Democrats, but almost universally from the president’s own party.

Trump’s plans include exemptions for Mexico and Canada, two trade partners that many Columbus industries export products to, and the president is offering a chance for other countries to apply for a similar reprieve.

While Hester declined to specifically identify local industries that would be most affected by a trade war, he acknowledged that generally speaking, auto parts manufacturers and auto makers could be particularly vulnerable to any retaliatory action to the tariffs.

“Among the companies I’ve spoken to, employers are concerned and looking at the impact of what the tariffs will mean to them,” Hester said. “There may be some anxious feelings right now.”

Faurecia spokesman Tony Sapienza said the company is monitoring the situation closely, but it’s premature to comment.

“Too much is in a state of development,” he said.

Faurecia opened a $64 million data-driven manufacturing facility just south of Columbus in late 2016. About 450 employees are producing a new, high-tech, emissions-control product for the commercial vehicle industry in the 400,000-square-foot facility in a partnership with Cummins Inc.

Faurecia supplies emissions-control systems and parts for Columbus-based Cummins, among some of the world’s largest automotive manufacturers that form its customer base. They include Ford, General Motors, Fiat, Chrysler and Deere & Co. The company also has automotive seating and interior business groups.

Representatives of Cummins Inc., headquartered in Columbus, have said exports and trade are the most important driver of the diesel engine maker and power company’s growth over the past 10 years. Cummins does business in more than 190 countries and employs more than 8,000 people in southern Indiana, making it the region’s biggest employer.

The company won’t know how much the tariffs might affect business until everything is finalized, spokesman Jon Mills said.

“But what we know is that it can affect material prices, which in turn affects the cost of our product, which makes us less competitive globally and hurts our overall business,” he said.

If that happens, it could also directly affect the company’s supply chain, Mills said. Cummins has 2,500 direct suppliers in the United States alone.

Cummins officials have had conversations with elected officials at all levels of government about how unilateral tariffs can harm American businesses, their workers and the overall economy, Mills said.

Having strong, modernized trade agreements is a way for companies to have better access to markets, and to keep employment stable and even add jobs, he said.

“When we have a level playing field, and equal access, we win,” Mills said. “Americans will win. We want to avoid instances of retaliatory actions.”

Every business that uses steel to produce products will see its costs increase and its profits decline, the Indianapolis Business Journal reported in a column by Cecil Bohanon and Nick Curott.

“After the last major steel tariff in 2002, many steel-using businesses laid off workers. Some went out of business entirely. As a result, it’s estimated that 200,000 Americans lost their jobs — 6,043 of whom were Hoosiers,” the Indiana Business Journal report said.

The Greater Columbus Economic Development Corp. survey shows the markets local manufacturers export to include primarily Canada and Mexico, but also include China, Japan, Germany, France, England, Brazil, Australia, Turkey and Argentina. A few of the manufacturers listed Europe and Asia as their markets.

Hester said if any of those countries decide to impose tariffs on their imports, it will make products more expensive in the United States and could result in a demand drop for Columbus products overseas.

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Julie McClure is assistant managing editor of The Republic. She can be reached at jmcclure@therepublic.com or (812) 379-5631.