Page 16 - Time_International_2019

РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS
TheBrief Business
from imported aluminum, as does Coca-
Cola. General Electric imports some
parts from China for the high-tech medi-
cal equipment it makes in Wisconsin.
And American retailers source many
of their goods from overseas too; when
Walmart pledged to buy more American-
made goods in 2013, the $50 billion it
committed made up just 1.5% of what it
spent that year buying goods globally.
As for St. Pierre, the company
made the decision to buy some
parts overseas when it began to
face growing competition in the
1970s from cheaper foreign prod-
ucts; prices had to come down if it
was going to keep customers. Peter
St. Pierre says his father used to get
nervous to raise suggested retail
prices by even a quarter. Now, with
the tariffs, the younger St. Pierre is
asking for $3 to $5 more. Further
complicating matters: even the
American- made steel the company
already uses for its horseshoes is
causing problems, its price having
increased 40% over the past year as
tariffs on Chinese steel intensified
demand for the domestic product.
“Everything we do here is steel-
related,” says St. Pierre, “and over
the last year or so, the price of steel
has been going up and up.”
TodAy’s TrAde wAr comes at a
particularly difficult time for U.S.
manufacturers. E-commerce tech-
nology is making it possible for
retailers to stock fewer items on
shelves and to fill orders only when
needed, resulting in better effi-
ciency for stores but fewer orders
for manufacturers. And rising minimum
wages, while a boon to workers, are in-
creasing labor costs. That means fewer
units are being made, St. Pierre says, and
each one costs more.
The problem is clear to business own-
ers like Morris Kessler, who started an
amplifier company in 1967. Today, that
company, ATI, makes high-end ampli-
fiers and audio equipment in Southern
California. Kessler’s experience shows
how tariffs put companies that source
components globally but make products
in the U.S. at a disadvantage: European
competitors can undercut his prices be-
cause they can buy Chinese components
14 Time June 3–10, 2019
without the added tariffs. Meanwhile, he
suspects his Chinese suppliers are get-
ting in on the trade war by raising prices
as a form of retaliation, as parts he used
to get for a penny now cost five cents.
“This is hurting companies that never
made anything in China,” he said.
Trying to source parts from the U.S.
alone would be nearly impossible. As
U.S. manufacturers stopped making
△ premium, because their workers
St. Pierre has been making pitching
horseshoes since 1938 and is now the only
company that still forges them in the U.S.
products that were more available
elsewhere— resistors and semiconduc-
tors for companies like Kessler’s, for
example— Chinese suppliers filled the
void. Establishing new supply chains
would take years.
In fact, as the trade war continues,
some American manufacturers may begin
buying more parts from overseas, rather
than fewer. Tube Forgings of America has
made steel fittings for energy facilities in
the U.S. since 1954; the fittings are made
in Oregon, but the company has sourced
carbon steel from overseas since the
1970s, which means it now pays the 25%
tariff. Competitors that import finished
products rather than raw materials into
the U.S. aren’t paying one at all. So com-
pany president Jay Zidell says he’s ex-
ploring the idea of buying semiforged fit-
tings overseas and importing them. That
would mean closing down part of his
plant and laying off workers. “What
choice do we have?” he says.
Other companies, including
General Motors and Winnebago,
have announced plant closings
and layoffs since the tariffs were
enacted last year. “It’s a hard situa-
tion for companies—even though
they’ve invested in the U.S., Presi-
dent Trump and the tariffs are
making it impossible to keep em-
ployment at current levels,” said
Christina Fattore, a political sci-
ence professor at West Virginia
University. Manufacturing em-
ployment, which had been increas-
ing steadily since the recession, has
leveled off in recent months.
Some American manufactur-
ers have adapted by charging more
for high-quality products, but they
worry that customers’ patience
with higher prices is running out.
In a 2017 Ipsos/Reuters poll, 69%
of American consumers said price
was very important to them and
77% said quality was, while only
32% said it was very important
that a product was made in the
USA. Many U.S. manufacturers
are already selling products at a
have more labor protections and higher
wages than those in China, and they fear
the trade war may push prices past what
consumers are willing to pay.
Which is why Peter St. Pierre is
worried about tacking that extra couple
of dollars onto price tags. Some retailers
have already stopped stocking more
expensive U.S.-made horseshoes in
recent years, he says, and replaced
them with lower- quality sets from
China. “It may get to a point where not
enough people are going to want to buy
horseshoe sets made in the USA,” Peter
St. Pierre says. “It really is getting more
and more challenging.” 