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McCaskill: Missouri manufacturers could be undercut by tariffs

McCaskill: Missouri manufacturers could be undercut by tariffs

August 28th, 2018 by Philip Joens in Local News

U.S. Sen. Claire McCaskill, D-Missouri, said Monday that Missouri manufacturers may be undercut by U.S. tariffs on steel and aluminum imports.

McCaskill held an event Monday in St. Louis to hear from manufacturers and farmers from across the state about how they've been impacted by 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports.

Brian Schaezler, ABB vice president and general manager, spoke to McCaskill at the event. ABB makes electrical transformers at its Jefferson City factory and employs 775 people, according to the Jefferson City Area Chamber of Commerce.

President Donald Trump announced tariffs on steel and aluminum imports in March.

ABB imports electrical steel used to make the transformers from Japan and South Korea. Steel imports from Japan are subject to a 25 percent tariff.

South Korean steel imports are not subject to a tariff but are subject to a quota of 2.68 million tons, or 70 percent of annual U.S. steel imports from South Korea between 2015-17, according to CNBC.

McCaskill said ABB is being forced to consider raising prices for its transformers or possibly be undercut by foreign competitors.

"If ABB can still compete against their foreign competitors, it's going to be more expensive, and those costs are going to be passed on to people who buy electricity," McCaskill said.

ABB spokeswoman Melissa London said the company is monitoring the situation but declined to say whether ABB is considering laying off employees or raising prices because of the tariffs.

"The development of punitive tariffs is in constant motion," London said. "We have a team dedicated to dealing with the impact on tariffs and are monitoring the situation closely."

Many of ABB's transformers are highly specialized, McCaskill said, so the company may not immediately be undercut by foreign competitors. She worries that advantage will disappear the longer the dispute drags on.

"It makes more sense for many of those to be built close to where the transformers are needed," McCaskill said. "But if they become more competitive in price, then they have competitors in Korea, the European Union and Mexico that can fill the need of their customers.

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Since the implementation of the tariffs, a handful of companies in the Midwest began hiring. In June, U.S. Steel announced plans to reopen a second blast furnace and hire 300 workers at its Granite City, Illinois, plant because of demand caused by the tariffs. Before that, U.S. Steel reopened another furnace and created 500 jobs.

That month, Mid Continent Steel and Wire in Poplar Bluff — the nation's largest manufacturer of construction nails — laid off 60 workers in June after tariffs on steel caused the company to raise prices and sales to fall.

McCaskill supported legislation in 2011 that helped manufacturers level the playing field with countries like China. McCaskill said in this series of trade disputes that there is a handful of companies that are hiring. However, she added that overall the state's manufacturers and farmers are being hurt more than helped by these tariffs and retaliatory tariffs placed on other goods.

"There are many more companies that are losers," McCaskill said. "When you pick winners and losers, the winners are going to love it and the losers are going to hate it."