Saturday, October 20, 2018
Politics

Tampa Bay and Florida businesses expect tariffs to drive prices up

TAMPA — Tariffs imposed by the Trump administration and other countries are beginning to push up prices and depress demand in spots around the Tampa Bay area and Florida, business executives say.

"We’ve definitely seen that the tariffs have increased the prices on steel," said Chris Bush, an owner at Titan Metal Service in Tampa.

Since last year, the cost of steel, both imported and domestic, has risen from 48 cents to around 60 cents a pound as Trump has pushed new tariffs on imported steel and aluminum. Steel produced in the United States might even be a little higher than that, Bush said.

On Thursday, Titan’s factory at Port Tampa Bay included rolls of steel from South Carolina, Alabama and Arkansas, as well as Turkey, Thailand, Vietnam and Colombia. The company cuts the steel into ribbons or sheets that customers make into products ranging from air-conditioning ducts to gym lockers.

So far, the tariffs have not forced Titan to scale back its staff of 25, but the higher costs are being passed on to customers.

"They don’t like them, but enough of it’s been in the news that they understand what’s going on," Bush said. "Regardless of your political beliefs, they don’t want to pay higher prices."

Around the Tampa Bay area, other consequences of a changing trade environment appear to include an expectation of higher retail prices for consumers, costlier steel for major projects such as Water Street Tampa and the Tampa Bay Rays’ proposed baseball stadium, and reduced foreign demand for yachts made in Tampa.

During the 2016 presidential campaign, Trump contended that international trade too often is conducted on terms that favor other countries at the expense of the United States and weaken industries like steel.

This spring, with Trump tweeting that "trade wars are good, and easy to win," his administration imposed a 25 percent tariff on steel and a 10 percent tariff on aluminum imported from Canada, Mexico and the European Union. Those moves prompted those countries to retaliate with tariffs increasing the cost of certain U.S. goods.

But Trump has not only targeted steel and aluminum.

Last year, the Trump administration opened a trade investigation that concluded that China’s government pursues discriminatory practices that burden U.S. trade, especially in the areas of technology transfer, intellectual property and innovation.

As a result, Trump’s administration moved to impose new 25 percent tariffs or duties on $50 billion worth of products from China.

On July 6, and China responded by imposing its own 25 percent tariffs on $50 billion worth of U.S. products in more than 650 categories.

In response to China’s response, the Trump administration announced plans to impose 10 percent imports on another $200 billion in goods from China.

Together, both rounds of new U.S. tariffs target more than 7,100 categories of Chinese goods, including seafood and other foods, building materials, industrial metals, glass and chemicals, electronic, photographic and computer components, furniture, artwork, leather goods, natural and synthetic textiles, carpets and other household goods, and sporting goods like golf bags and baseball gloves.

But wait, there’s more: Last week, auto industry representatives and a bipartisan group of 149 House members pushed back against President Trump’s threat to levy sweeping tariffs on automobile imports.

As it stands, the tariffs’ impact on Floridians could come in two ways. First, exporters in Florida could see a drop in foreign demand for their products. Second, Floridians could pay more for goods produced overseas.

U.S. CHAMBER OF COMMERCE: How Trump’s trade war could affect Florida

Consumers should expect to see the cost of the new tariffs added to what they buy in 2019, said Peter Quinter, a veteran customs and international trade law attorney in the Miami office of GrayRobinson.

"It’s going to reverberate throughout the economy," Quinter said. "It doesn’t matter if you’re buying a car or a computer or footwear. Costs are going to go up, and the selection of available merchandise goes down."

The Florida Retail Federation says the tariffs "have the potential to negatively impact almost every business in Florida, including our 270,000 retail establishments."

"By increasing the cost of products or reducing the money that Floridians and visitors have available to spend, our member retailers will see declines in sales resulting in lost jobs that hurt Florida families," federation president and CEO Scott Shalley said in a statement to the Tampa Bay Times.

‘The people you don’t want to punish’

Among the Florida industries expected to be hit hard in a trade war are yacht and recreational boat manufacturers.

The U.S. Chamber of Commerce says motorboats, apart from outboard models, are the No. 1 Florida export to Canada, Mexico and the European Union threatened by tariffs, with an estimated $197.7 million in trade at stake.

Florida’s yacht industry does another $73 million abroad that is in jeopardy.

At Bertram Yachts in Tampa, CEO Peter Truslow this week had orders for two 61-foot yachts on life support.

One was from Monaco, the other from Italy. Both were serious buyers. But both were balking at paying a 25 percent tariff — $1 million — on top of the $4 million purchase price.

"We fully expected without the tariffs to get these orders," Truslow said.

Bertram Yachts moved from Miami to Tampa two years ago and has invested $20 million in its factory near the Gandy Bridge. Thanks to domestic orders, business is good, but Truslow’s hope to expand his workforce of 90 employees is on hold because the export market has collapsed.

"It’s over until those tariffs are lifted," he said.

Moreover, the retaliatory tariffs on U.S. exports are just part of the problem. Truslow also expects the Trump administration’s new 10 percent tariffs on Chinese goods to make components for his company’s yachts more expense.

"We absolutely expect price increases because so much, particularly stainless (steel) hardware, comes from China," he said. "There is virtually no stainless hardware and aluminum hardware manufactured in the U.S. any longer. A lot of the components listed will be affected by those import tariffs."

Even most of the fiberglass that goes into the boats comes from China, he said, which means that the casualties of a trade war will be the workers who install the fiberglass.

"We are punishing the exact people that you don’t want to punish — the people supporting the American economy," Truslow said.

"The perception in the public is there’s a bunch of rich guys hanging out at fancy marinas or something," he said. "But 90 percent of the people that work in the yacht business, they’re laying fiberglass and installing hardware. They’re hourly, hard-working guys, the same as you’d see in a car manufacturer. Those are the ones that get affected."

Nor is Truslow alone.

This week, the Orlando Sentinel reported that Bill Yeargin, chief executive officer of Orlando-based Correct Craft, said Trump’s new tariffs and retaliatory tariffs from other countries could eliminate thousands of jobs in the recreational boating industry.

Correct Craft has 1,300 employees, 600 in Central Florida, but Yeargin told U.S. Sen. Bill Nelson 200 of those jobs "could be at risk if it doesn’t come to a resolution."

"We’re not planning any layoffs," Yeargin said, but "eventually, it’s going to be a big problem."

The Sentinel said an analysis provided to Nelson said manufacturers will have to deal with 10 to 25 percent tariffs on more than 300 Chinese component parts used to make boats, plus the added costs added to the finished product by retaliatory tariffs — 10 percent on U.S. exports to Canada, 15 percent in Mexico and 25 percent in the European Union.

The counter-tariffs "are the ones that could potentially be the most damaging" by making "boats significantly more expensive going into those countries," Yeargin said. "About 30 percent of our business relates to boats we ship into 70 countries around the world. And we’re concerned that the tariffs are putting those boat sales at risk."

‘There’s no plan’

Quinter, the Miami trade attorney, uses terms like "panic" to describe the surge of activity and concern he’s seeing from companies that do business across borders.

To find anything like it, you have to go back to the laws that re-structured international trade after the 9/11 terror attacks.

"Since then, I have not seen as much chaos in international trade rules until now under the Trump administration," said Quinter, who has practiced customs and international trade law for more than 30 years.

This week, Quinter said he advised a Tampa-based technology company concerned because it imported many components for a product produced in the United States and sold around the world.

"Now they have to figure out either how to source their products from some place other than China or pass on that 25 percent cost to their customers," he said.

U.S. companies could find sources for imports in places like Vietnam, Malaysia, Indonesia or Mexico, Quinter said, but he doubts that "factories are going to start making these same products in the United States."

"I just don’t see that happening," he said.

Around the Tampa Bay area, the consequences of the new tariffs are expected to ripple through the economy in other ways, too:

• Steel going into major buildings at Water Street Tampa, the $3 billion project being planned by Tampa Bay Lightning owner Jeff Vinik and Bill Gates’ Cascade Investment fund, is getting more expensive.

"Across all our projects, we have started to see a notable increase in the cost of aluminum and steel products as a result of the recent tariffs," Ali Glisson, the spokeswoman for the Vinik-Cascade development company, said in an email. "We are working diligently with our contractors, suppliers and vendors to control the cost impacts as much as possible. Despite these cost impacts, we are committed to ensuring that the impact of those costs are minimized for the people living, working, and visiting Water Street Tampa."

• The Tampa Bay Rays likewise have acknowledged that they have factored the cost of higher-priced steel into the $892 million ballpark they want to build in Ybor City. At Tampa International Airport, which is embarking on the second phase of a $2 billion expansion program, TIA spokesman Danny Valentine said officials are watching, "but are not aware of any specific impacts at this time."

• At the Tampa Bay Times, a 30 percent Trump administration tariff on Canadian newsprint would add $3.5 million a year to the cost of newsprint, "an extra cost we simply cannot afford," Times CEO Paul Tash told the U.S. International Trade Commission, which is considering making the newsprint tariff permanent.

TAMPA BAY TIMES CEO: Newsprint tariffs are hurting newspapers, local communities

The newspaper has not increased prices, Tash said, but has reduced the publication schedule for the tbt* free tabloid from five days to one day a week to save newsprint and this year laid off about 50 employees, including about a dozen in the newsroom.

At Titan Metal Service, Chris Bush has been reflecting on what happens if prices rise across the board.

"You have to start to think that at some point it will slow down the economy," he said.

At Bertram Yachts in Tampa, Peter Truslow said he doesn’t have a problem with the Trump administration getting more aggressive to ensure that there’s free trade.

"But it’s becoming clear to me and businessmen around the country that there’s no plan," he said. "There’s no end game. I mean, they’re shooting and asking questions later."

MORE: Go here for more Business News

This report includes information from the Associated Press. Contact >Richard Danielson> at [email protected] or (813) 226-3403. Follow @Danielson_Times

   
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