Tallahassee manufacturers brace for impacts from President Trump’s tariffs

From the Tallahassee Democrat

Four containers stocked with 20 tons of steel rails arrived on July 6 in the Port of Jacksonville from China. The cargo was bound for Residential Elevators, the nation’s leading producer of home elevators headquartered in Tallahassee.

In the ensuing days, the shipment was trucked to the company’s Crawfordville facility for processing. For the 22-year-old manufacturer, it seemed like business as usual. It was the kind of order made every four to six weeks.

However, for the first time, the cargo came with a 25-percent mark up after President Trump ordered tariffs on steel and aluminum imports from China.

What used to be a $60,000 shipment cost $15,000 more, said Residential Elevator President Erin Ennis.

“Many people thought this was posturing and may not go into effect,” she said of the tariff. “At this point, we are monitoring it closely, and we are evaluating what our actual cost will be and what adjustments we will need to make.”

Area manufacturing companies like Residential Elevators and Danfoss Turbocor Compressors that depend on international imports are beginning to feel the impact and the higher cost due to the trade war being waged in Washington and other world capitals.

Residential, the premier home elevator manufacturer, opened in 1996. Product Testing and wood work takes place at its Crawfordville site. The facility in Cairo, Georgia, handles most of the steel side of its manufacturing, which includes rails used for the elevator to ride on. Residential elevators cost on average between $25,000 to $30,000.

The company has 275 employees in 15 states; a third work in the Greater Tallahassee area. For now, their jobs are protected.

“Our costs will go up and those costs will be passed onto the consumer eventually,” said Ennis, adding the company prides itself on building a product in the U.S.— an issue in the fight over tariffs.

Trump’s tariff on steel and aluminum may be just the beginning. The tariff is essentially an additional tax on imports. The first tariff imposed by the Trump administration was ordered in January and covered solar panels and washing machines. Steel and aluminum tariffs were imposed two months later.  That impact is just being felt.

Sue Dick, president and CEO of the Tallahassee Chamber of Commerce, said she’s not clear on how many local companies will be affected.

“These new trade policies are in the early stages of implementation and it’s too soon to know what the overall economic impact will be as companies work to understand the full cost that could result from these changes,” she said.

In the meantime, a trade war with China is heating up.

This week, President Trump threatened to more than double tariffs on $200 billion of Chinese goods, according to USA Today.

Trump requested U.S. Trade Representative Robert Lighthizer to increase tariffs on Chinese goods to go from 10 to 25 percent, a jump from earlier this year. This move comes while the White House issued a bailout for farmers who produce soybean and pigs in the Midwest.

“We have been very clear about the specific changes China should undertake,” Lighthizer said in a statement, reported by USA Today. “Regrettably, instead of changing its harmful behavior, China has illegally retaliated against U.S. workers, farmers, ranchers and businesses.”

So far, neither China nor the United States has been willing to make concessions in the trade fight.

Joe Kelly, CEO of Ghost Controls, which produces DIY automatic gate openers systems, said the new tariff will cost his Tallahassee-based company a quarter million dollars over the course of a year. He receives orders on a steel container of steel products from China

“It’s certainly something we don’t like to see and it’s yet another business challenge,” he said. “We’re making it clear to our customers that if things change with regard to the policies on the tariffs, we will immediately change pricing.”

Danfoss Turbocor Compressors Inc. – the world’s leading producer of energy-saving compressors – employs 25,000 people in more than 100 countries. Its Tallahassee operation uses a group of components imported from overseas that are subject to tariffs.

Like Ghost Controls and Residential Elevators, Danfoss received a shipment last month with a 25 percent higher cost than usual. The additional cost will be passed on to its customers, said Danfoss Turbocor President and CEO Ricardo Schneider.

“We don’t have any other choice,” he said. “We can’t absorb it in our cost.”