OPINION: Steel tariffs are hurting U.S. manufacturers

The North American Association of Food Equipment Manufacturers urges President Trump to take action.

As president of a manufacturing company in Milwaukee, we began last year full of optimism. Our business, Lakeside Manufacturing, which has been making products and providing jobs in Milwaukee since 1946, was expanding thanks to the hard work of our employees, a growing footprint in the foodservice market and investments in innovative start-ups. We were confident that the Tax Cuts and Jobs Act (TCJA), and the Trump administration’s efforts to reform burdensome regulations, would free up additional resources to invest in our workers and business.

Unfortunately, the Trump administration’s unexpected decision to impose tariffs on imported steel and aluminum could have consequences that are devastating for American manufacturers, like us, for both the raw materials we use and in selling our products here and abroad.

As president of a major trade association that represents more than 550 foodservice equipment and supplies manufacturers across the country, including 29 in Wisconsin, I know our company isn’t alone. These companies create and provide jobs that help sustain their local communities. However, many of them use stainless, carbon steel, and aluminum raw materials to make their products — and that’s become a major problem.

Even companies that use only American-made steel suffer when foreign supply is locked out of the domestic market. The protected American steel industry immediately took advantage, when the tariffs were announced in March, to hike their prices 15 to 25 percent lead times — the time it takes for an order to get delivered — became longer and less predictable within 30 days and worsened throughout the year. Supply chain shortages started to occur by June and became an issue for a large share of our members. American steel mills (overwhelmed with orders due to the dwindling pool of supply), shifted production capacity to their most profitable lines, even if it meant leaving longtime customers without raw material by further extending already long lead times.

All of this happened before the Trump administration’s recently expanded tariffs to include Canada, Mexico and the European Union. The price and supply situation will worsen; with even greater wait times and higher costs that are happening now during the peak season for our members.

Few winners emerge from the United States becoming an island of high steel prices compared to the rest of the world. Domestic steel producers may enjoy higher profits for a time, but in the end, they pay a steep price, too. The foreign companies that buy our products can’t wait around forever for their manufacturing suppliers to fill their orders — nor will they pay higher prices for the US made products they need to serve the growing foodservice industry around the world, reducing demand for domestic steel. They will simply turn to overseas suppliers that make those same finished products for less.

Our company has invested in new brands over the past 10 years and we operate a second manufacturing operation in Tennessee. Taking the chance on those start up brands was not an easy decision, but we knew then that you must stay innovative to compete. Tariffs undermine our ability to do so and expand our business domestically and internationally.

Succeeding in our competitive industry is tough enough without trying to navigate chaos in the supply chain caused by the Administration’s decision to protect the top of the chain (steel producers who employ a total of 140,000 workers) at the expense of the rest of the chain (downstream steel users who employ more than 6.8 million workers). Frankly, the thousands of hard-working employees at our 550-member factories deserve better than that.

President Trump campaigned on the promise to boost American manufacturing. The steel tariffs will have the exact opposite effect and need to be terminated as soon as possible.

Joe Carlson is president of Milwaukee-based Lakeside Manufacturing, Inc., and current president of the North American Association of Food Equipment Manufacturers (NAFEM).