INTERNATIONAL NEWS
11
Tariffs will ultimately affect US
plumbing manufacturers negatively
Plumbing manufacturers in America have declared their delight with US President
Donald Trump’s announcement that the US would impose an additional ad valorem
tariff of 10% on imports of butt weld pipe fittings and carbon steel flanges from China,
but other punitive taxes on imports could see the gains stripped away in the long term.
By Warren Robertson
The new taxes are all part of Trump’s tariff war with China
that have thus far seen billions of dollars in fees added to
various imports to America across numerous industries from
the Far East country.
If resolution to the escalating trade war with China is not reached
by the end of the year, the tariffs on butt weld pipe fittings and
carbon steel flanges from China will increase to 25% on 1 January
2019, something plumbers in the US are currently welcoming.
“As a family-owned and operated business that manufactures
these products here in the US, it is gratifying to see the US finally
taking direct and decisive action against these Chinese imports,”
said Weldbend president and CEO, James Coulas Jr, in a statement
released to the media.
Weldbend is just one of the companies that will benefit over the
short term from the tariffs, but signs are on the horizon that other
tariffs enacted by Trump against European Union, Canadian, and
Mexican steel and aluminium imports back in May, also designed
to protect American companies, may in fact be backfiring on US
manufacturing, and may undo, and in fact reverse, the gains.
For instance, US aluminium tariffs, which were meant to protect
the industry from foreign competitors, are instead taking a bite
out of the earnings of the nation’s largest producer. In September,
Alcoa Corp. lowered its 2018 profit projection as tariffs on imported
aluminium presented what Roy Harvey, chief executive officer,
called a ‘significant’ headwind. The company has been hit with
USD15-million in additional costs on material, as it is made mostly
in Canada and shipped to the US — costs that will ultimately have
to be passed on to the manufacturers.
“Months ago, the US Chamber warned that alienating our
strongest global allies by launching a tit-for-tat trade war, would
harm the US economy and undermine American leadership,”
Myron Brilliant, executive vice-president and head of international
www.plumbingafrica.co.za
affairs for the US Chamber of Commerce, said in the
statement. “This is even clearer today.”
“US steel prices are already almost 50 per cent higher than
those in Europe or China, and aluminium prices have been
extremely volatile …The tariffs add substantially to these
challenges,” said Brilliant.
The September tariffs on USD200-billion worth of products
from China comes on top of the USD50-billion worth already
taxed earlier in the year, meaning that nearly half of all
Chinese imports into the US are levied. The latest tariffs
went into effect on 24 September, starting at 10 per cent
before climbing to 25 per cent on 1 January 2019. The
timing of the staggered increase will partially reduce the
toll of price increases for holiday shoppers buying Chinese
imports in the coming months.
“For months, we have urged China to change these unfair
practices, and give fair and reciprocal treatment to American
companies,” Trump said. “We have been very clear about the
type of changes that need to be made, and we have given
China every opportunity to treat us more fairly. But, so far, China
has been unwilling to change its practices.”
The Aluminium Association in America has said it is
disappointed by the tariff expansions because the real problem
in US manufacturing comes from overcapacity in China caused
by ‘rampant, illegal’ government subsidies.
“[These actions do] little to address the China challenge, while
potentially alienating allies and disrupting supply chains that more
than 97 per cent of US aluminium industry jobs rely upon,” said
Heidi Brock, the group’s president and chief executive officer, in a
statement. “During a time of record demand for aluminium in the
United States, it is critical that aluminium producers across the
value chain have a steady and reliable source of supply.” PA
November 2018 Volume 24 I Number 9