Trade War: Find Out How The Tariffs Are Impacting New York Businesses and Consumers

From USA Today’s Press Connects 

The co-owner of a flatware manufacturer outside of Utica, Owens has seen his profits increase between 20% and 30% in recent months.

“The ‘Now Hiring’ sign is up out front,” Owens said.

“We have about five positions we need to fill, unless things pick up even further. Then it’ll be more.”

Owens’ good fortune comes at a time of uncertainty for business owners across New York.

A year-long trade dispute between China and the United States has brought instability to the global market as President Donald Trump seeks a better trade deal between the two countries.

But trade talks stalled earlier this month, causing the U.S. to raise tariffs from 10% to 25% on $200 billion in Chinese imports.

The tariffs effect everything from foreign steel to printed circuit boards, and companies in New York said they are seeing varying degrees of impact from the trade fight.

China announced an increase in tariffs on $60 billion worth of U.S. goods in response to Trump, impacting a wide range of products, including agriculture — a sector where New York is among the leaders in the nation.

“There will be nobody left in China to do business with. Very bad for China, very good for USA!,” Trump tweeted Monday.

With less foreign steel coming into the country, domestic mills, which have been traditionally more expensive, have increased output, helping to drive down costs.

That’s benefited Owens, who uses only U.S. stainless steel to manufacture his product, which he sells directly to customers, helping to save on costs.

“We’ve seen our costs go down by 15%,” Owens said.

Other businesses across the state — from manufacturers to farmers — said they have seen sales decline and profits shrink, leaving many worried about their future.

“We had a really bad year last year,” said Lauren Chmielowiec, the owner of Upstate Steel, a metal distributor in Buffalo.

“I have to believe (the trade fight) had something to do with it,” she added.

Manufacturers and distributors of industrial products said the fluctuating markets make it difficult to budget and provide estimates to customers.

“Prices up, way up; way down. It kills us,” said Mike Young, president and COO of Klein Steel, a Rochester-based metals supplier for the Northeast.

“We can’t manage our cost of goods in times like these very well, which means we have to manage our inventory balances superbly, which is very difficult. We’re in a cyclical by nature, seasonal business.”

Companies like ICM Controls — which manufacturers electrical components for heating, ventilation and air condition units — have had to pass costs onto customers and seek out cheaper suppliers, said Laurie Kadah, the company’s chief financial officer.

“In some instances, it’s caused a lot of extra work on our part to locate alternate suppliers. Some prices were impacted,” she said.

The company, which employees 200 in the Syracuse area, has seen a 2% drop in sales over the last year, which Kadah attributes to the “instability” of the markets brought on by the trade war.

“I think that the market place is leery about placing orders until they know exactly what’s happening in trade,” she said.

Contractors have also experienced an increase in raw materials, like quartz for countertops.

Builders said they are being stung by the tariffs on projects already bid. When a contractor bids a project, they estimate material prices based on current market conditions.

But with the current uncertainty, prices can rise after contract agreements are reached, potentially leaving contractors on the hook for unexpected costs.

“What’s clear is that some contractors will have to deal with cost overruns that they can’t pass on to their customers,” said Brian Sampson, president of the Associated Builders & Contractors of New York.

“But in most cases, the increased cost of the tariffs will be passed on to customers resulting in more expensive construction projects or higher costs for capital goods.”

Impacting farmers and small business

New York is one of the nation’s largest producers of many agricultural products, ranking first in cottage cheese and yogurt, second in apples and maple syrup and third in milk and grapes.

“It doesn’t bode well for our farmers who need to get back into the world markets that have shrunk through the ongoing trade war,” said Steve Ammerman, spokesman for the New York State Farm Bureau.

“Farmers compete in a global market place, and commodity prices have remained low, in large part, because of the troubles in our export markets.”

Stuart Leventhal owns Down To Earth Living in Pomona, Rockland County, and specializes in the sale of outdoor furniture and home décor.

His company has imported wicker-style and other outdoor furniture and Christmas decorations from China for about 20 years.

Recently, he began to have his own outdoor furniture designs manufactured in China, saying, “We couldn’t pick a worse time.”

How will consumers be affected?

Leventhal said he can’t simply tack on the tariff cost.

“I can’t maintain my margins and my costs and my financing by simply passing on dollar-for-dollar,” he said. For example, he said, an outdoor furniture set that costs $1,000 will be hit with $250 in tariffs, but he would need to charge $500 more to recoup his investment.

The higher cost will certainly mean fewer sales: “The ability for the company to survive depends on having sufficient margins to meet our overhead.”

Leventhal said the tariffs will achieve one government goal: a decrease in purchases from China. But there’s a consequence for consumers.

“Survival dictates that you compromise the quality in order to bring in a more salable product,” he said. “My company to date has not compromised the quality.”

Still, not everyone is opposed to President Trump’s actions.

Some business owners, like Owens, believe the ongoing trade war will benefit the U.S. in the long-run.

“If you put us on a level playing field with the rest of the world, because of our high degree of automation, we will be a major player,” Owens said.

“You can’t just say it will pan out. If it rains for two weeks, yeah, OK, the sun will come out, right? But when?,” Chmielowiec said.

Includes reporting by Albany Bureau Chief Joseph Spector and Journal News staff writer Nancy Cutler.

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2019-05-22T13:12:26-04:00