Tariff Plan Leaves Manufacturers Divided --- Some executives see it aiding domestic orders; others say it will prove costly

"Manufacturing executives are split on whether President-elect Donald Trump's campaign promise to raise tariffs on imports would increase production in the U.S.

Some makers of high-value and precision products said they are optimistic Trump's trade policies will draw some customers back to the U.S.

Other company executives said raising tariffs on goods from countries like China would likely cause them to shift production to other low-cost countries. They said their customers won't support paying more for U.S.-made items.

"Our experience has been that, for our products, the ship has literally sailed for U.S. manufacturing," said Steve Greenspon, chief executive of Illinois-based housewares company Honey-Can-Do International. "I have not heard stories about success moving these products back to the United States."

Trump's campaign identified tariffs on imported goods as a way to generate revenue for the federal government and encourage companies to invest in more U.S.-based manufacturing. Trump has proposed 60% duties on imports from China -- akin to adding a $60 charge to every $100 worth of goods -- to address low prices that U.S. companies say they can't match.

After Election Day, investors bid up shares of steel and aluminum companies and other U.S.-based manufacturers, betting that they will be winners from Trump's policies to promote more domestic production.

Tariffs that Trump imposed in 2018 on imported steel and aluminum largely remain in place. Trump later put tariffs on thousands of finished goods and materials from China to address U.S. manufacturers' concerns that higher domestic metal prices put them at a disadvantage against foreign competitors selling products made with cheaper steel or aluminum.

Lourenco Goncalves, CEO of steelmaker Cleveland-Cliffs, said this week that the domestic steel industry needs more help against imports. The U.S. now has some of the world's highest steel prices.

"I anticipate a lot more actions in terms of protecting the domestic market," Goncalves said during a conference call.

U.S. steelmakers over the past five years have built new mills in anticipation of higher demand. It might be difficult for producers to find customers for their output if steel prices rise as a result of more tariffs, said Josh Spoores, an analyst for business-research firm CRU Group. "What we really need now is to see support for more steel demand," he said.

Absorbing higher costs associated with relocating supply chains and production back home could hurt profits, executives have said. Absorbing tariffs can be costly, too.

Recreational vehicle maker Polaris said last year that tariffs on components from China for its all-terrain vehicles cost the company $100 million a year. Polaris said it had started to buy some components from Mexico to avoid the tariffs.

Donald Allan, CEO of Stanley Black & Decker, said last week that the tool company would likely raise prices and shift production out of China if Trump levies additional tariffs on goods imported from the country. Allan said shifting production to the U.S. is unlikely.

Over the next year, footwear and accessories seller Steven Madden plans to reduce its exposure to potential tariffs on Chinese goods by moving manufacturing to countries including Cambodia, Vietnam and Mexico, according to Ed Rosenfeld, the company's CEO. Rosenfeld told analysts this week that the company is aiming for roughly a quarter of its business to be subject to potential tariffs on Chinese goods, down from just under half currently.

Electronics manufacturers have also started migrating to Southeast Asia from China as a result of tariffs and what they describe as increased risks when doing business in the country.

Trump's tariff proposal would accelerate this move, according to trade specialists. Companies that can't switch their supply chains quickly enough to other countries likely would have to increase the price of their devices significantly, the specialists said.

In 2019, Apple and other firms selling electronics were facing down a potential of 10% tariff on imports from China. But in a phone call, Apple CEO Tim Cook personally lobbied Trump, explaining how tariffs would increase iPhones prices and hamper its ability to compete against rivals like Samsung, The Wall Street Journal reported. In a matter of days, the Trump administration pulled back on tariffs that would affect a number of devices, including the iPhone.

Some say tariffs would contribute to bringing back manufacturing to the U.S. Matthew Moore, a former Apple engineer who worked on manufacturing design for the iPhone and Apple Watch, said tariffs could better protect renewed efforts to build up domestic manufacturing.

In 2022, Moore co-founded a company called Cruz, which makes a cordless blender. The company currently assembles its product in China, but he is looking to move that work to the U.S.

"America needs some tariffs," Moore said. "We need to rebuild our manufacturing base."" [1]

60 percent tariffs on imports from everywhere, including Mexico, would stop the rat races, and rebuild the USA manufacturing base.

1. U.S. News: Tariff Plan Leaves Manufacturers Divided --- Some executives see it aiding domestic orders; others say it will prove costly. Tita, Bob; Tilley, Aaron.  Wall Street Journal, Eastern edition; New York, N.Y.. 09 Nov 2024: A.4.