By Tim Krohn
The Free Press, Mankato, Minn.
McClatchy-Tribune Information Services
MANKATO, Minn. — Officials at businesses that sell or buy products made of steel and aluminum aren’t the only ones with concerns about President Trump’s implementation of a 25 percent tariff on foreign steel and 10 percent on aluminum.
Those who raise crops are also on edge about the potential for retaliatory tariffs from other countries and a potential rewrite of NAFTA.
Business leaders say they are waiting to see just how much the tariffs affect prices.
“Prices have been going up anyway because of more demand,” said David Richards, vice president and co-owner of Jones Metal in Mankato, Minn.
“If you throw in tariffs, people say steel prices will jump 25 percent, but I don’t think it’ll go up that much. If it does, you’re not buying very well.”
Brewers, who sell an increasing amount of beer in aluminum cans, worry the tariffs will usher in higher costs and limit supply.
“Every penny counts,” said Tim Tuppy, owner of Mankato Brewery. The brewery just recently switched to cans rather than bottles because they’re lighter and cheaper to ship.
Tuppy said there are 171,000 cans on a semi truck load. “You add a penny per can and that adds up. Or what if it’s 5 cents a can more and that gets passed on to the consumer?
“We have to make our margin and the distributor and the retailer have to make money. So if you hit the manufacturer, it’s going to be added onto all along the way.”
Tom Schwinghammer, owner of Minnesota Iron & Metal in Mankato, said metal markets have already been in a bit of turmoil, both because of increased demand and because major buyers have been waiting to see what would happen with tariffs.
“I’ve seen some sheet and plate steel where they’re out of it because people don’t want to stick their necks out and buy a lot until they’re sure which way it was going.”
Minnesota Iron sells new angle iron, sheet, plate and rebar steel used in the ag industry and manufacturing in southern Minnesota.
“We’ve been busy. There’s a lot of demand.”
He said prices for steel have already been going up because of demand. “But when the announcement (of tariffs) came out, there was a shock through the whole system.”
Schwinghammer suspects that Trump’s decision to exclude Canada and Mexico from the tariffs if they renegotiate the NAFTA treaty will likely calm the steel markets some.
Richards said Jones Metal already buys all domestic steel so the tariff on foreign steel won’t directly impact them, at least immediately.
“When we cut stuff on our laser, we cut a lot of jobs at the same time. If one of those jobs is a certified or government job, that has to use domestic material. So we decided in order to remove any confusion about whether it’s domestic or not, we just buy all domestic steel.”
Richards said growing demand for steel has driven up metal prices. “There’s already shortages of some common steel.”
He said he’ll wait to see how the tariffs play out and the response trading partners have to them.
“If it drives job growth in the U.S., I’m in favor of that. But if it starts trade wars, I’m not in favor of that. If we’re going to have fair trade, let’s have it.”
While those buying and selling steel and aluminum are the first to be directly affected by the tariffs, many others are waiting to see if and how it affects their industry.
Export agriculture is a huge part of Minnesota’s economy — $7 billion annually. Minnesota is the fourth largest agricultural exporting state in the country, sending soybeans, corn, pork and wheat all over the world — almost half to Asia.
China is Minnesota’s biggest farm export market.
Tom Slunecka, CEO of Mankato-based Minnesota Soybean, which represents the state’s soybean growers, said he and his member farmers are worried about starting trade battles.
“Anything that will impact trade will have a dramatic impact on Minnesota farmers. Just China alone, 25 percent of our (state’s) beans are shipped to China.
“But that number pales compared to all the protein — corn and soy, animals — that come from Minnesota and is shipped out.”
Slunecka said exempting Canada and Mexico from the metal tariffs helps. “They are two of our biggest trading partners for meat and soy. But we can’t afford to lose China and Southeast Asia.”
And farm groups are concerned because Trump tied continuing the exemption for Canada’s and Mexico’s to those countries’ stances as they renegotiate the NAFTA trade agreement. NAFTA benefits many farm exports and changes to it could affect them.
He said the association works to expand soybean export markets and to highlight the higher quality of Minnesota soybeans.
“The value market is what’s important. We want to make sure we’re selling our beans to the markets that appreciate the quality. We have a quality that’s higher than other parts of the world.”