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Wisconsin industry leaders look a year ahead if tariffs stay in place

Friday, October 26, 2018   (0 Comments)
Posted by: Patrick Leary, Milwaukee Business Journal

Perhaps the greatest challenge posed by the tariffs that have been put in place by or resulted from the Trump administration's policies is uncertainty, both over if they will escalate and when they will end.

Despite that uncertainty, Wisconsin manufacturing and industry leaders tried to predict what their various business situations will look like should tariffs, including ones on steel and aluminum, Chinese goods, and retaliatory policies from other nations, continue for another year.

The executives were featured at a panel discussion hosted in Waukesha at Husco International by Farmers for Free Trade, a government advocacy group, as part of its Tariffs Hurt the Heartland initiative.

Tariffs Hurt the Heartland released a report Thursday that estimated Wisconsin companies paid 47 percent more in tariffs in August 2018 than they did in August 2017, and that the administration's tariffs directly and indirectly cost those same firms $54 million this summer. Here's a look at what the six panelists said when asked to project what their business will look like through another year of that climate.

Mary Isbister, president, GenMet Corp.: "If the tariffs stay the same, and they don't increase, and we don't get new ones, we'll be OK. We have strategic relationships with our customers. We're very transparent. We work well and effectively together. We support each other's industries. We will survive and adapt as we have through lots of different economic cycles in the manufacturing industry.

"But if things continue to change, or if there's a lot of uncertainty and ambiguity in what's going to happen in trade policy, that's where we will have difficulty, as will other organizations, whether it's banking relationships or how many people do you hire because you're anticipating growth or you don't know if you're going to have growth. Those are things that businesses in every industry have a really hard time grappling with."

Austin Ramirez, president and CEO, Husco International: "If the tariffs stay long term, we'll be less profitable, we'll invest less in the community, and we'll have relatively more production overseas than we do in the U.S., versus if the tariffs weren't here."

Dan Katt, co-founder, Good City Brewing: "If expansion gets too expensive, you just don't expand or you expand less. That's probably the main thing, and then the second part is if our margins get squeezed in, that's less that we have to be engaged in the community."

Susan Quam, executive vice president, Wisconsin Restaurant Association: "We're a business of entrepreneurs and small business and independent people. It's difficult to start a restaurant. It's difficult to get it up and running. It usually takes a couple years before you see profitability. With not only the issues relating to equipment buildouts and possible changes in food prices that are going to make it more difficult, and you couple that with the labor shortage we have, I think we're going to see fewer startups, fewer new restaurants coming into play as that pressure is there moving forward."

Jim Holte, president, Wisconsin Farm Bureau: "In agriculture, the tariffs in place now are compounding the issue of global oversupply of food products. Nearly all the basics, milk, grain, beans, oil seeds. The continued tariffs in place or additional ones are just going to continue to drive the challenges of profitability for farmers. Farmers are price takers not price makers. So while there is an active futures market out there, the opportunities to look forward and lock in a profitable price are very limited in nearly all of the major commodities. I would include, very appropriately, dairy in that, because dairy is what Wisconsin is. Half of the agriculture industry in Wisconsin is dairy. It's extremely important to us.

"So the continued tariffs will have a challenging effect on profitability for both my neighbors and colleagues."

John Kirchner, executive director, U.S. Chamber of Commerce, Midwest Region: "Tariffs are a tax. These tariffs are going to be passed down to the end consumer, so your prices of products, goods and services are going to go up. For those businesses that are going to absorb a lot of those costs, if your prices aren't going up that means they're maybe not expanding, they're maybe not hiring new employees, they're wages aren't going up to the same degree.

"More broadly, the economy is moving along quite nicely. Unemployment is historically low. GDP growth is very strong. A lot of that is tied to tax reform and regulatory reform. These tariffs could have a significant negative impact on the economy as a whole, which is going to affect everyone in the country from top to bottom."

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