Walorski Shares Feedback From Hoosier Businesses Impacted by Tariffs at Ways and Means Hearing

Last week, Congresswoman Jackie Walorski (IN-02) shared feedback from Hoosier businesses affected by steel and aluminum tariffs at a House Ways and Means Committee hearing on the impact of tariffs on the U.S. economy and jobs.

“Historic tax cuts and regulatory reforms have revived America’s economy, but I am constantly hearing from businesses in northern Indiana that steel and aluminum tariffs are driving up costs and making it more difficult for them to grow and create jobs,” Walorski said after the hearing.

“The administration has taken steps to narrow these tariffs to better target unfair trade, but more must be done to protect businesses and jobs here at home. I will continue listening to Hoosier manufacturers, farmers and workers, and making sure their voices are heard so we can keep our economic momentum going.”

Video of Walorski sharing local businesses’ feedback at the hearing:

She read the following quotes from Hoosier job creators in a wide range of industries:

• (We’ve seen) a 50% increase (in the price of steel), mostly since the tariffs were announced. Additionally, there is a shortage of steel. We are furloughing the production line in (one facility) today and will probably have to furlough some of the guys in (our main facility) later in the week due to lack of availability of material. We have raised prices to our customers but because (our product is) a low margin item – the combination of the increase and the lack of availability is affecting sales.”

• “We cannot switch to a U.S. source, and it would take 1 to 2 years for us to get approval from our customers if there was a U.S. source. We will continue to import steel and will pay the duties. So far we have incurred about $15,000 in tariff costs with a potential of another $240,000 based upon the orders we have already booked with (our) Japanese steel supplier. We are moving forward with our exclusion requests; so far the cost has been close to 100 hours to complete these exemption forms along with some legal costs for review and advice.”

• “We have rolling shortages of steel and we are on allocation (from our supplier in Utah) … Prices had already gone up 25% and 30% respectively (on aluminum and steel) because of speculation. Now we are seeing a trend past 30-35% each. Of course, I am livid.”

• “We observed steel prices starting to move up in early 2017 on just the talk of potential steel tariffs and a sharp escalation in steel prices in the last 3 months as the tariffs started to become a reality. This has resulted in a 15% to 29% increase in the cost of our steel. To put this in perspective, our increase in steel cost is larger than the entire cost of providing health insurance to our workforce.”

• “We are the sole manufacturer left in the United States that manufactures this type of product. Our competitors import all or most of their finished product from either Mexico, China, Vietnam, etc., therefore avoiding any impact of this tariff…The bottom line is this, if you raise our steel and aluminum prices, our prices will have to increase in order to cover the cost. Our foreign competitors will not be affected. … We currently purchase all our steel and aluminum from domestic sources.”

• “We are in the process of trying to build a 147,000-square-foot warehouse. (The company building the warehouse) gets their steel from Canada, a country exempted from the steel tariff. However, we are unable to get a firm quote even out of Canada, because prices are beginning to rise there with so much demand shifted to Canada. It is not on hold – we have to build it – so we are at the mercy of a volatile market.”

• “When purchasing raw materials, we give preference to domestic steel mills wherever possible. We enjoy long, outstanding relationships with many domestic mills. We want them to thrive. … The actual dynamics of the entire metalworking market have evolved in the last 40 years. … In some cases, we find that domestic mills cannot meet the quality standards required by our customers; or they cannot meet the quality standards at a competitive cost. In those cases, we will buy foreign material. … Why put a tariff on these items?”

A Flurry of Executive Orders

President Trump’s number of executive orders has now topped 30; a look at the latest that occurred during the week:

  • America First Offshore Energy Strategy – Akin to a study committee, it directs Interior Secretary Ryan Zinke to review the current five-year development plan on the Outer Continental Shelf for offshore oil and gas exploration, as well as review the regulations and permitting process for development and seismic research. Zinke also will take comments from the public in addition to conducting his own examination – probably through the U.S. Fish and Wildlife Service with input from the Department of Exterior and the Environmental Protection Agency. The order also prevents Secretary of Commerce Wilbur Ross from designating any new or expanding existing marine monuments and/or sanctuaries. Most likely, President Trump – even if he wins another term – will be out of office before anything could really change in this area.
  • Establishment of the Office of Trade and Manufacturing Policy – The goal is strengthening domestic manufacturing and reducing the trade deficit. This directive puts Peter Navarro, President Trump’s principal trade adviser, in a permanent post – one enforcing the “Buy American” policies the President has established as a priority. On a related note, signed the same day was the Order Addressing Trade Agreement Violations and Abuses. “As far as I can tell, there has never been a systematic evaluation of what has been the impact of the World Trade Organization agreement on the country as an integrated whole,” Ross said during the press announcement. The Indiana Chamber strongly supports free trade agreements that create free and fair trade for the United States. We believe that international trade touches Indiana business of all sizes at some level. With 95% of the world’s consumers outside the U.S., Indiana and the nation would be shortsighted not to recognize the benefits of maintaining and even expanding our commerce ties with other countries.
  • Establishment of the American Technology Council – The objective is to help the government transform and modernize its digital services. President Trump will preside over the group, which will give “advice to the president related to policy decisions” regarding our government’s use of information technology.
  • Order Promoting Free Speech and Religious Liberty – Undoubtedly heavily influenced by Vice President Mike Pence, this directive offers relief to those groups that object on religious grounds to the Affordable Health Care Act provision mandating employers to provide certain health services, including contraception. They now can lawfully not abide by this provision. The order also allows the Internal Revenue Service to exercise “maximum enforcement discretion” over the Johnson amendment, which prohibits tax-exempt religious entities from stating political endorsements or opposition to a candidate.

Go Vote! Then Let’s Move from Politics to Policy

Indiana Chamber of Commerce President and CEO Kevin Brinegar comments on the election aftermath:

“We probably have just witnessed the most bizarre and bruising election of our lifetimes. It’s critical to move on quickly from any bitterness of the campaigns or results and come together as a state and nation.

“We need lawmakers to concentrate on the business of governing and moving our economies forward. Let’s focus on producing positive outcomes and Indiana continuing to set an example as a state that gets things done.”

Rep. Susan Brooks to speak on U.S. Global Leadership

87741351Learn why America’s engagement overseas matters and what’s at stake for Indiana from Rep. Susan Brooks (R-5th District).

The program (8 a.m. Thursday, March 24 at the Conrad Indianapolis) will be hosted by the U.S. Global Leadership Coalition, with the Indiana Chamber an event partner. Breakfast is provided and an RSVP is required.

Learn more and register online or contact Ashley Bradford at abradford@usglc.org.

What Can be Done Now to Assist Job Growth?

The U.S. Chamber’s Campaign for Free Enterprise offers some thoughts on what President Obama can do right now to kickstart American job creation. (Note: As we are sometimes asked about it, we are not affiliated with the U.S. Chamber of Commerce.)

Zero.

That was the number many Americans were talking about during the unofficial final weekend of summer, because that was the number of net jobs created in August.

Zero isn’t so much a number as the absence of one. It’s a void, a hole. Our economy is in a hole with millions of people unemployed, and millions more who have given up looking for work.

Lots of jobs plans will be bandied about, including one from the President in a speech to Congress on Thursday. The business community has to be part of the discussion. In an open letter sent to the Congress and the President yesterday, the Chamber offered six steps that should be taken now to spur job creation without adding to the deficit.
 

Expanding trade and global commerce

• Passing three pending free trade agreements with South Korea, Colombia, and Panama could create 380,000 jobs;
• Modernizing export controls and could help create 340,000 jobs;
• Expanding U.S. exports by advancing the Trans-Pacific Partnership and initiate trade talks with the EU, our largest commercial partner, to eliminate all barriers to goods trade with Europe;
• Protecting 19 million IP-related jobs by cracking down on rogue websites and passing patent reform legislation.

Producing more American energy

• Opening up offshore resources could help create 144,700 jobs;
• Expanding access to federal lands for oil and gas exploration could add 530,000 new jobs;
• Promoting development of natural gas in resource-rich shale would create 116,000 jobs (in Pennsylvania alone);
• Approving the Keystone XL pipeline connecting Canadian oil fields to refineries in Texas, a project that would support 250,000 jobs.

Speeding up infrastructure projects

• Passing surface transportation, aviation, and water resource bills to enable communities to plan, hire, and prevent layoffs;
• Removing documented obstacles to 351 stalled energy projects, which could help create 1.9 million jobs annually;
• Removing impediments to private capital could add 1.9 million new jobs over 10 years;
• Fully implementing the Energy Savings Performance Contracts (ESPC) Program, which could create 35,000 jobs a year.

Welcome tourists and business visitors to the United States

• Removing the hassle factor by expanding the visa waiver program and streamlining the visa application process;
• Promoting American destinations and restore the U.S. share of the travel market to its 2000 level, which could help create 1.3 million jobs by 2020.

Streamlining permitting and provide regulatory certainty and relief

• Geting job-creating projects moving;
• An executive order prohibiting discretionary regulations with a substantial economic impact would give businesses certainty and help spur hiring;
• Taking up to $1 trillion in accumulated private capital off the sidelines and into business expansion by eliminating uncertainty caused by burdensome regulations.

Pass job-creating tax incentives

• Implementing a repatriation holiday and could lead to 2.9 million jobs over two years.
• Creating a corporate capital gains tax window in order to free up capital for investment and job creation.

Shipping Wheat, Wind Turbines and More

When I say I’m going to provide you some St. Lawrence Seaway shipping statistics, the reason is more than the alluring alliteration. Our friends in Northwest Indiana are well aware of the Great Lakes shipping connections to the St. Lawrence Seaway and the tremendous economic impact of those important waterways.

Wheat and wind turbines are leading the way. Check out the news courtesy of Marine Delivers:

The latest statistics from the St. Lawrence Seaway show that grain shipments are up more than 20 percent as the marine highway benefits from international demand for American and Canadian wheat.
 
Year-to-date grain shipments from March 22 to June 30 totaled 2.6 million metric tons, compared to 2.1 million metric tons during the same period last year. While Canadian grain shipments were up three percent for the period to 1.9 million metric tons, the surge was predominantly fueled by a 127 percent increase in U.S. shipments of 400,000 metric tons heading through the Seaway to overseas markets.
 
Rebecca McGill, director of trade development for the Saint Lawrence Seaway Development Corporation, noted that the 2011 navigation season continues to reflect respectable gains in general cargo and agriculture products.

There is one market, however, that is booming – the transportation of wind turbine components. Year-to-date general cargo shipments, which includes wind turbines, has increased by 404 percent. McGill said: “Shippers carrying wind component cargoes continue to send vessels into Great Lakes ports. These oversized pieces move economically by water to ports where rail or, more commonly, trucks move them to site destinations."

Trade Ya!

One of the more positive recent federal developments was the signal that pending free trade agreements may be resurrected. Such deals are in place with South Korea, Colombia and Panama, with approval of the South Korea pact a logical place to start to boost a number of U.S. industries. The National Center for Policy Analysis offers:

The trade pact between the United States and South Korea, which would eliminate about 95 percent of tariffs on industrial and consumer goods within five years, has the usual advantages in promoting job-creating exports.  It would help domestic industries involved in telecommunications, technology, pharmaceuticals, farming and financial services gain access to an important market, say USA Today.

Even American manufacturing, a usual source of opposition to these types of deals, should have reasons to like this one. 

  • South Korea is a highly developed and educated nation with average wages approaching those in the United States and environmental standards that, in some cases, are more stringent.
  • What’s more, U.S. manufacturing, after decades of technology-driven productivity gains and related job losses, is highly competitive and showing signs of a rebound.
  • In large part this is a result of exports, which are healthy even as domestic consumption lags.

Another argument for the trade deal with South Korea is not economic but geopolitical.  A vibrant and prosperous South Korea is a check against the ambitions of the bizarre and belligerent regime to its north, says USA Today.

Who knows, this pact could be a harbinger of things to come, as an overly indebted U.S. economy begins to focus more on investment and savings, and sees trade with fast-growing emerging nations in Asia and Latin America as something to support, not fear.  In any case, ratification of the South Korea deal should be high on the Senate’s agenda for 2011.

Have a Question for Mitch Roob? Here’s Your Chance

Mitch Roob’s job is to sell Indiana. He does it in all corners of the state, from coast to coast and on a global basis. Roob will slow down for an hour on Friday to participate in the Indiana Chamber’s Policy Conference Call.

It’s a members-only event, and it’s your opportunity to ask a question or make a comment to Indiana’s Secretary of Commerce. I’m looking forward to leading the discussion and have plenty of topics planned. Among them: foreign trade missions, the balance between attracting new companies and assisting existing businesses, legislative priorities and much more.

It should be a good one. Join us on Friday. Register here.

Candidate Shoots Hole in Typical Politics

Political ironies abound in many states. One example is West Virginia, where the Democratic governor running for a U.S. Senate seat is"taking aim" at the White House, health care reform and cap and trade. Longtime election traditions may see a change on Election Day.

If there’s any doubt that West Virginia Gov. Joe Manchin is trying hard to convince voters that he’s not a typical Democrat, just look at the latest ad from his Senate campaign…

Manchin is doing everything he can to remind voters that he’s a conservative Democrat who cares about the issues they do, even as Mr. Raese tries to paint him as a “rubber stamp” for President Obama, who is deeply unpopular in the state. Manchin was expected to coast to victory, and in July had a 16-point lead in the polls. But anger against Mr. Obama seems largely responsible for his precipitous drop in popularity.

Still, Manchin was handed a gift of sorts in a Raese ad that aired last week. In it, West Virginia voters are shown saying that Manchin should “stay right here in West Virginia.” Except that the men turned out to be Philadelphia actors who answered a casting call for actors with a “hicky, blue collars look” and encouraged them to wear “John Deer” hats.

Raese’s campaign pulled the ad and pointed out that the casting company, not the campaign, was responsible for the wording – and that ads from both parties often use hired actors – but Manchin has lost no time highlighting the fumble in an ad of his own.

“John Raese thinks we’re hicks,” his spot says, adding that Raese moved his family to Florida “to avoid paying West Virginia taxes" and that, "obviously, we’re not good enough for him.”

Turnaround on International Trade

The Small Business & Entrepreneurship Council contends recent developments in international trade are actually promising for the U.S., despite a decline in recent years:

Two stories are to be found in the latest trade numbers issued by the U.S. Bureau of Economic Analysis. One is bad. The other offers hope.

The first story is about a historic decline in trade for 2009 overall. U.S. exports decline by 15 percent – from $1.83 trillion in 2008 to $1.55 trillion in 2009. The story on imports was even more striking – a 23 percent decline from $2.52 trillion in 2008 to $1.93 trillion in 2009.

These trade numbers go along with the reality that the U.S. economy in 2009 experienced its sharpest one-year decline in more than six decades.

The second story is that this dramatic decline in trade, which specifically ran from July 2008 through May 2009, has since reversed course. Exports hit bottom in April, and subsequently climbed for eight straight months. Meanwhile, imports bottomed in May, and have increased in six of the past seven months, including for four consecutive months.

Export and import levels have still not climbed back to where they were in mid-2008, but exports (seasonally adjusted) were up by 17 percent in December 2009 versus April 2009, and imports were up by 23 percent from May to December.

Again, it is important to understand that rising imports mean expanded sales by and opportunities for U.S. firms, while increasing imports signals at least some life in the domestic economy, that is, consumers and businesses are buying more imported consumer and capital goods and services.

If you’re an optimist seeking hopeful signs in this tough economy and harsh policy climate, then trade is the place to look. Now all we need is for the President to follow up with his pro-trade rhetoric in the State of the Union with pro-trade policy actions.