Congressman Derek Kilmer was in Aberdeen Wednesday to speak to local manufacturers about the impacts of the escalating trade wars and the uncertainty of tariffs on their businesses.
“There’s growing concern around the impact of the trade policy in D.C.,” he said after an afternoon session at Greater Grays Harbor, Inc. “Some local businesses are feeling the impact of the escalating trade war.”
Montesano-based Vaughan Company, builders of specialty pumps and other products that are sold around the world is feeling the impacts of the tariff on steel, said Kilmer. Because of the tariff, steel suppliers will no longer give materials quotes that last longer than 24 hours, making it difficult to plan long range in terms of finished product costs.
“Steel is one of their primary components,” said Kilmer. Since Vaughan’s primary competitors are outside the country, specifically Canada and Sweden, “it puts them at a competitive disadvantage.”
The lack of predictability in the application of tariffs is putting companies at a further disadvantage, said Kilmer.
“What most employers want from government is trust and predictability,” said Kilmer. Because of the uncertainty of materials pricing and, overall, what tariffs may be coming down the pike next, companies are having a difficult time remaining competitive and predicting the feasibility of future hiring and expansion, he said.
A representative from Vaughan said the tariffs so far have not resulted in any job cuts, but admitted it was the air of uncertainty that concerned the company.
Ascensus Specialties, a chemical company in Elma, has also felt the impacts. One of their primary manufacturing components is sodium, which when imported is subject to a 10 percent tariff, increasing the cost of a critical raw material, said Kilmer.
Increased costs of raw materials put manufacturers who rely on exports in a difficult situation, said Kilmer.
“Some of the businesses I’ve talked to have said they have the choice of eating (the increased cost of production) or passing it on to the customer,” he said. “In a competitive environment if they try to pass it on they could lose a customer, sometimes to foreign competitors, which puts us at cross-purpose to what we should be doing.”
Cosmo Specialty Fibers in Cosmopolis is a manufacturer that could get hit doubly hard, though so far they have escaped increased costs due to tariffs, said Kilmer. Because they rely on imported raw materials, and many of their customers are overseas buyers, they could literally be hit with tariffs coming and going if imported raw materials and their finished products are subjected to tariffs in the future.
“I’m concerned this will hurt job creation in places like Grays Harbor County, where we really need it,” said Kilmer.
Kilmer added raw materials tariffs could also impact municipalities, ports and other public entities. If part of their long-term planning includes projects including materials like steel, the uncertainty in the cost of that material could put some projects on hold.
The foreign trade market is not an even playing field. Kilmer said there are “legitimate concerns” over nations like China, who “aren’t always playing by the rules.” But he does not believe a trade war is an easy win.
Kilmer has visited numerous manufacturers and businesses throughout the district, everything from geoduck divers and shellfish growers to farmers, ranchers and manufacturing businesses, and has heard similar concerns across the board. He’s hopeful his peers in Congress are hearing the same and will take a more proactive stance when Congress reconvenes.
When it comes to tariffs, “Congress basically completely leaves the field,” allowing the Trump administration to “be able to do what it wants without congressional insight,” said Kilmer. “As more representatives hear the negative impacts I’ve been hearing, I’m hoping more and more of the Congress will get engaged” in the current trade environment.