Even Iowans who aren't out on the field or standing on the factory floor are paying for the escalating global trade war, said Economist Dave Swenson.
The United States lifting tariffs on steel and aluminum imports from Canada and Mexico — plus overall improvements in the manufacturing sector — have provided some Quad-City manufacturers with a sense of relief. But the lingering trade war between the U.S. and China is a different story, said Swenson, of Iowa State University.
And he said both unresolved of the trade disputes are costing local consumers, as more manufacturers choose to pass on the cost.
"It's a mess. It doesn't look like the deal with China is being negotiated toward resolution," Swenson said. "And you and I are paying for it. If you wanted to put solar panels up or buy a washing machine, you're paying a higher price. We are paying more for appliances and the cost of production of things made in the U.S., from automobiles through electronics."
The Trump administration's most recent tariff increase from 10% to 25% on $200 billion in Chinese goods — and China's retaliation in kind — means prices could jump for other products.
Earlier this month, Walmart announced it would have to raise prices due to the additional tariffs slapped on Chinese goods. Smaller retailers and businesses have fewer options than major corporations for absorbing costs.
The higher tariffs on Chinese imports could mean the typical American household pays an extra $831 in annual costs, according to an analysis from the Federal Reserve Bank of New York. That's about double the earlier estimated impact of $419 per household, which included tariffs introduced last year.
The trade dispute is taking the biggest chunk out of farmers' incomes, at an especially difficult time as farmers also deal with an overabundance of crops and harsh weather conditions. The Trump administration announced a $16 billion aid package last week to assist farmers facing low commodity prices.
In turn, that's hurt one of the Quad-Cities' largest employers, agriculture manufacturer Deere & Co. In announcing second-quarter earnings earlier this month, Moline-based Deere lowered its full-year earnings forecast, plus announced plans to scale back production at large North American plants.
"Ongoing uncertainty with trade policies have had a negative impact on agriculture and on the sentiment of our customers concerning investing in new equipment," Deere spokesman Ken Golden said.
In announcing quarterly earnings, Golden said Deere announced the impact of tariffs would lower net income by around $75 million. He said most of the increased costs are related to steel, in both direct purchases of steel and in purchases of parts and components containing the metal.
The trade war between the U.S. and China, Swenson said, has the furthest reaching impact on the Quad-Cities region, where agriculture meets top multinational companies.
But for some companies manufacturing metal parts from imported steel and aluminum, tensions between the U.S., Canada and Mexico also have taken a toll.
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Matt Meenan, a spokesperson with the Aluminum Association, said the lifting of tariffs on steel and aluminum from Mexico and Canada was welcome news.
"The hope is that this eases concerns about the possible destruction of demand in the mid-to-long-term. Artificially raising the price of our material makes it more attractive to look at other materials," he said. "We think it's important and appropriate to have strong trade enforcement. But we haven't been in favor of across-the-board tariffs, especially with our strong relationship with Canada."
With the tariffs lifted, Black Cat Wear Parts is looking to slowly bring steel manufacturing back to American factories, including in DeWitt. Last summer, the DeWitt factory laid off 10 of its 17 production employees and scaled back operations.
The company has been manufacturing metal in its home country of Canada to avoid higher costs.
"Production at that factory has been quiet since the tariffs went in," said Rob Forgrave, vice president of product management. "We prefer to do production there, but couldn't do it. We should be able to get back to it, as long as we can find the employees. Unemployment is low there, so we'll see."
Gary Carlson, a spokesman for HNI Corp. in Muscatine, said the company and others in the industry have been raising costs, sourcing products elsewhere and looking for cheaper, alternative materials to use.
Swenson said the manufacturing sector has been improving at a "surprising rate," reaching pre-recession employment levels. He said it's been especially positive for manufacturers of fabricated metal products, of which the Quad-Cities region has many.
Company leaders hope the lifting of tariffs is a sign the proposed trade agreement between the U.S., Mexico and Canada, or USMCA, will be ratified.
Meenan applauded the deal calling on the U.S. and Canada to stop importing aluminum and steel that is subsidized or sold at dumped prices.
But many argue the USMCA is largely the same deal as the 24-year-old NAFTA it would replace.
"The USMCA is projected to have only a minor direct impact on Deere’s North American operations as key elements such as rules of origin for heavy equipment remain unchanged from NAFTA," Golden said.
"It's the same darn thing, except for some minor changes," Swenson said.
Still, business leaders hope for quick ratification to open up market access in a global economy engulfed in uncertainty.