Baltimore area businesses brace for tariffs on steel and aluminum imports

A day after President Donald Trump announced steep tariffs on imports of steel and aluminum, Baltimore-area businesses that rely on overseas supplies of the metals braced for uncertainty.

Nearly all of them expected costs to rise and supplies to be disrupted. Some worried about the impact on jobs, while others expressed hope that the move might level the playing field for U.S. manufacturers.

Prime Manufacturing Technologies was already expecting delays getting the overseas aluminum from which it makes the plastic injection moldings for customers in the automotive, medical, electronic and construction industries, said Luke Chow, president and CEO of the Howard County company.

Its supplier was having trouble getting the raw material amid threats of the tariffs.

“Because of the tariffs, they were reluctant to ship to the U.S. at this point, until they figure out what’s going on,” Chow said. “Our delivery to our customers could be longer. Our ability to deliver is important to us and to our customers. … It is concerning.”

Chow worries, too, that domestic aluminum mills won’t be able to increase capacity fast enough to meet demand. Longer term, though, he’s more hopeful.

“I would support building a stronger manufacturing base in the U.S.,” Chow said. “I think we should be to a large degree self-sustainable, rather than depending on our raw material coming from outside our borders, where we may not have control.”

Trump vowed to impose tariffs next week of 25 percent on imported steel and 10 percent on aluminum. The president said the tariffs were needed to protect both national security and the nation’s ability to compete. By building barriers to imported metals, the tariffs would allow U.S. steel companies to expand production and charge higher prices than they could with overseas competition.

He tweeted Friday that “trade wars are good, and easy to win.”

Critics, though, warned of retaliation by trading partners, loss of jobs and a lack of alternatives for sourcing materials used in everything from autos, airplanes, appliances and food cans. Higher prices, some said, would squeeze the companies that use the materials and potentially the consumers who buy the finished goods.

Some economists warned that if consumers must pay more for cars or businesses more for heavy equipment, the resulting slowdown in spending could hamper the economy.

“Higher prices for consumers could eventually lead to slower U.S. economic growth and result in reduced (overall) factory employment,” Moody's Investors Service cautioned in a report.

The tariffs and the prospect they could ignite a conflict with America's trading partners rattled Wall Street: The Dow Jones industrial average plunged 420 points on Thursday and an additional 71 points Friday.

John Danko, president of Danko Arlington, a 98-year-old family-run aluminum foundry and machine shop near Pimlico, expects costs for aluminum to increase.

Danko would be forced to pass on any cost increases on to the commercial and defense customers who buy the spare parts it makes, he said. But that would not necessarily make the company less competitive because Danko sells products only in the United States and costs would increase for his U.S. competitors as well.

“The way we feel is competitive-wise, all the aluminum companies are going to be in the same boat,” Danko said. “We’re all facing the same challenges with price increases, but in my opinion, it is a national security crisis if we don’t have these resources here, and we need to be a safe nation.”

Switching to domestic suppliers won’t be a simple prospect, he said. Many aluminum mills have closed, while some older mills have become obsolete.

General Motors, which employs 315 people at a plant in White Marsh that makes transmissions for Chevrolet and GMC pickup trucks and electric drive motors for Cadilac, said it buys more than 90 percent of its steel for U.S. production from U.S. suppliers.

“We need to better understand the details around the [tariff] announcement, but the bottom line is we support trade policies that enable U.S. manufacturers to win and grow jobs in the U.S., and at the same time succeed in global markets,” the automaker said in a statement

Some business leaders said they are waiting for additional details about how the tariffs would be imposed and on what forms of aluminum and steel, though an administration official said Friday that it would apply to all forms of the metals.

“If it’s across the board, it could affect everybody,” said Kenneth Sanchez, president and CEO of Chesapeake Specialty Products, a Sparrows Point maker of steel abrasives used by manufacturers. “Right now, everything is up in the air. We buy a lot of U.S. steel, and I imagine it would raise the price of U.S. steel.”

But he added that threatening to impose tariffs “might be a negotiating tactic” on Trump’s part.

Critics of steep tariffs include the University of Maryland’s Gary A. Cohen, a clinical professor of international business and supply chain management at the Robert H. Smith School of Business. Cohen, who could not be reached Friday, argued in a recent Investors Business Daily commentary that imported steel and aluminum support U.S. manufacturing, including hundreds of thousands of jobs.

“Crippling our ability to import steel and aluminum from other countries will actually do more harm than good to American companies and consumers,” he wrote.

Bill Hutton, president of Titan Steel Corp., in Southeast Baltimore, called tariffs a bad idea. Titan Steel makes flat rolled steel products, including tin plate used in metal food, aerosol and paint cans, that it exports to more than 30 countries.

“We depend on — and our employees in our operation in Baltimore depend on — our being able to sell our products around the world,” Hutton said. “Our competitors are overseas companies, and we need an open and fair trading system. … If the U.S. is going to put up barriers to trade, what will prevent other countries from putting up barriers to trade?”

Titan’s U.S. customers, companies that make metal containers, “are facing competition from finished products, metal containers, imported from China,” Hutton said. “If our steel in the U.S. is more expensive because of tariffs, that puts people who make metal containers at a competitive disadvantage.”

The Associated Press contributed to this article.

lorraine.mirabella@baltsun.com

twitter.com/lmirabella

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