One western Wisconsin manufacturer has raised concerns over the Trump administration's plans to impose higher tariffs on Chinese steel. The company — OEM Fabricators — doesn't think increasing tariffs will help stabilize steel prices, which have skyrocketed in the last six months.
OEM Fabricators is a custom metal fabrication company based in Woodville, Wisconsin. The company has had trouble giving customers accurate quotes for their projects because many steel-makers have only been guaranteeing prices for 24 hours.
The price of steel has been very volatile — it was $600 per ton last fall and shot up to more than $850 per ton this month.
"We've had customers that have said 'we will not accept a price increase,'" said OEM President Mark Tyler. "When we're looking at increases of this magnitude, then we just can't accept the work."
OEM spends about $20 million a year on steel, most of which — 75 to 85 percent — comes from plants in Canada or the United States.
Tyler said his company believes in the free market and adding a 25 percent tax to steel from China would likely affect the world steel market.
"This (tariff on Chinese steel) adds a lot of tension," he said. "Anytime you look at increasing a price, that's very burdensome. Obviously, nobody ever wants to see a price increase. Ultimately, that ends up affecting finished products."
While the Trump administration is expecting tariffs to close the gap on the U.S. trade deficit with China. what's currently unknown is how China will react to the tariffs, and if they will put their own tariffs against the U.S. in place as a form of retaliation. That possibility has some Wisconsin farmers worried.
"One of the fears that the agricultural industry has is that right now, for China to have max effect on their tariffs, they're not going to announce a tariff right now on soybeans," said Scott Sinner, a partner in Sinner Bros. & Bresnahan of Bloomer, Wisconsin which imports soybeans to China.
"They're going to wait until farmers plant their crop in the ground and then they'll announce the tariff. Because at that point, they'll have a captive audience and a captive market and there's really nothing for farmers to do," Sinner said.
Sinner added that 60 percent of the U.S. soybean crop is exported to China, but other countries around the world grow enough soybeans to make up for any loss of soybeans from the U.S.
Ali Abootalebi, a University of Wisconsin-Eau Claire political science professor who studies international trade, said tariffs create uncertainty in markets around the world.
"Tariffs are unfair barriers," Abootalebi said. "They simply distort prices and they are not good tools for trade."
Abootalebi said another way for the U.S. to close trade deficits with other countries is to increase productivity through things like more job retention and better technology.