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Oct. 30, 2020

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In Clark County, tensions rising over tariffs

Businesses bracing for higher costs, possible dip in supply of steel, aluminum imports

By , Columbian staff writer
Published:
6 Photos
Jorge Sanchez, yard supervisor at State Pipe & Supply in Vancouver, moves bundles of steel pipe with a forklift Wednesday. Tariffs and new trade agreements could affect the supply of steel in Clark County, industry experts say.
Jorge Sanchez, yard supervisor at State Pipe & Supply in Vancouver, moves bundles of steel pipe with a forklift Wednesday. Tariffs and new trade agreements could affect the supply of steel in Clark County, industry experts say. Ariane Kunze/The Columbian Photo Gallery

A week after President Donald Trump imposed tariffs on steel and aluminum imports, the only thing clear in Clark County is that costs and uncertainty are rising.

“It’s just a lot of changes,” said Heinz Lange, sales director for the Port of Vancouver. “Down the road, with this administration, we know anything can change at any time.”

Tariffs went into effect March 23, adding 25 cents to every dollar’s worth of foreign steel imported to the United States, and a dime to aluminum.

Rising prices and a potential dip in supply could raise costs for businesses, at least in the short-term. That has already hurt one local manufacturer and is expected to affect consumers, too.

“Ultimately what I’ve heard is that the customers almost 99 percent of the time say they’ve just accepted it,” Lange said, referring to the higher costs. “They’re paying it. They’ll budget for it in the future. That means you and I, the end consumer, will have (to bear) that cost.”

Steel and aluminum are used in products ranging from cars to soda cans. U.S. Secretary of Commerce Wilbur Ross has argued tariffs would make beverages only pennies more expensive and add about $175 to the cost of a car.

But steel-heavy businesses say their costs may be steeper.

Vancouver fabricator Thompson Metal Fab, which makes large things out of steel from pipelines to bridge components, said it has already had one customer put a project on hold due to the tariffs.

“A contributing factor was the increased expense of materials,” said President John Rudi. “We’ve already seen a lot of price increases just as a result of the threat (of tariffs).”

Rudi said the rising costs have mostly plateaued, so he doesn’t expect any job losses. However, the tariffs have already curbed Thompson’s growth.

“If projects get put on hold, it keeps us from where we’re at instead of increasing employment” as the company had planned to do this year, he said.

Tariffs add more tension to the construction industry, as well. Wood prices are rising in part due to tariffs on softwood lumber, and low unemployment has led to higher wages for laborers.

All of those costs — now including steel — compound into pricier rents, leases and homes. Builders will have to raise prices or else projects will stop breaking ground, said Matt Olson, co-founder of construction firm Robertson & Olson.

“If rents don’t go up, people are not going to build,” he said. “We’re right on the precipice, I think, of projects not penciling. Unless it all rises together and everyone’s making more money to afford higher rents, but that’s beyond my crystal ball.”

Shortage from South Korea?

Trump’s tariffs on metals don’t hit all countries equally. Imports from Argentina, Canada, Mexico, Brazil, South Korea and several European Union countries have been exempted.

But South Korea, one of the largest suppliers of steel through the Port of Vancouver, was only spared by agreeing to cut its U.S.-bound steel exports by 30 percent.

That new quota pressures South Korean companies to sell their products to more profitable customers, like the oil and gas industries in gulf states like Texas and Louisiana.

“There are going to be a lot of projects that we can’t supply,” said Ron Hartman, general manager of State Pipe & Supply, a subsidiary of South Korean conglomerate SeAH Group. “There’s not a lot of good coming out of this.”

State Pipe’s Vancouver operation supplies steel pipe to be used in plumbing, construction and drilling. It goes not just to builders but other distributors in Alaska, Washington, Oregon, Idaho, Montana and four provinces in Canada.

“The tariffs, we’ve been talking about this with our customers for almost a year. We braced for it,” he said. But, he added “if you take a high-rise and add another 25 percent to that, you’re going to have to take another look at it.”

Hartman, whose career with the company spans 30 years, said it was also too early to tell what will happen next. Projects paying the extra 25 percent were likely ordered months before the tariffs were announced.

“We won’t know until a year from now,” he said. “People are paying the price now because they can’t stop these projects.”

If South Korean suppliers start sending product elsewhere, the Port of Vancouver will have to make sure it has a variety of sources, said Lange.

“If that quota gets filled (by another port), and there’s still demand in the Northwest, you buy from Taiwan, Japan or elsewhere and pay that 25 percent extra,” he said.

But Lange noted that these aren’t problems that keep him up at night. Not unless a country decides to level its own tariffs against grain, the Port of Vancouver’s biggest export.

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