The Trouble with Tariffs

On Monday motorcycle company Harley Davidson announced plans to shift some of it’s production outside the U.S. to avoid the EU’s retaliatory tariffs that were imposed last week to counter President Trump’s 25% steel tariff and his 10% tariff on aluminum.

“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles available to customers in the EU and maintain a viable business in Europe,” the company said, via the Washington Post. For now the company plans to absorb the estimated $30 million to $45 million in added costs rather than passing it on to the consumer, while they prepare their move. It’s expected to take the company nine to eighteen months to complete it’s shift overseas.

While Harley Davidson prepares to move part of their production outside the U.S., another lesser known company has already laid off 60 workers.

Mid-Continent Nail located in Poplar Bluff, Missouri announced the lay-offs on June 15. According to Missourinet, the steel tariffs that took effect June 1st have already impacted their business by 50% in just two weeks. The 60 temporary workers might be just the beginning for one of the largest employers in Butler Country, and the second largest in Poplar Bluff, who warn they might slash another 200 hundred jobs sometime in July and faces possible closure by labor day.

Spokesperson Elizabeth Heaton for Deacero, the Mexico-based parent company of Mid Continent told Missourinet, “Deacero is being hit with the 25% tariff for importing steel to its own company.”

Mid Continent is not the only Missouri company that has had to cut jobs, Tim Powderly, co-owner of SEMO Box Company told Missourinet on Monday, that his family owned business had to lay-off four of their temporary employees in reaction to the downturn in business lost from Mid Continent’s sharp decline in nail orders to be shipped.

Mid Continent’s hope for continuing to do business in Missouri rests with the approval or denial of their tariff exemption application, currently 20,000 companies have filed for a tariff exemption with the federal Commerce Department, but as Joel Johnson CEO of Borusan Mannesmann Pipe US, explained to ABC news on Monday, “We don’t have any proof we’re being heard.” The Texas based company says without a waiver the company faces levies of up to $30 million a year.

ABC notes in the linked article above that Texas has a large pipe mill industry and many have filed for exclusion requests, but “most of them are in the dark, unsure if their applications will be approved as the Commerce Department struggles to process a dramatically higher number of requests than it expected to receive.”