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Tariffs Damage Massachusetts Companies

Posted by Kristen Rupert on Sep 10, 2018 8:30:00 AM

The thousands of member employers of Associated Industries of Massachusetts (AIM) are increasingly concerned about the negative effect of current and proposed tariffs on Massachusetts companies.

Itnl.PortParticularly alarming are tariffs on raw materials, components and finished goods coming from China. While we concur with the need to address China’s unfair trade practices, we do not believe that tariffs are the best strategy. Tariffs are already hurting our companies here in Massachusetts and additional damage is anticipated, by business owners and leaders.

AIM hears weekly from companies across industries—retail, machining, consumer goods, manufacturing, plastics, semiconductor— who are suffering from recent tariffs and are concerned about proposed tariffs.

One Massachusetts CEO told us: “Tariffs are by far the most serious issue my company has faced in 40 years of business—much more important than health insurance costs, regulations, and finding workers...”

These companies need tariffs eliminated.

What are the tariffs?

  • The U.S. imposed tariffs this past spring on steel (25 percent tariff) and aluminum (10 percent tariff) imports from Canada, Mexico, the EU and other countries. In response the EU, Mexico, Canada, Turkey, and Russia immediately instituted retaliatory tariffs on US exports to those countries. India will implement retaliatory tariffs this month.  
  • The U.S., separately, imposed two rounds of tariffs on $50 billion worth of Chinese products earlier this summer. The U.S. is now considering a third round of tariffs, which may take effect as soon as this week, on an additional $200 billion worth of goods from China. These tariffs range from 10-25 percent.   The China tariffs effectively tax U.S. consumers and manufacturers on many goods that they purchase from China.

The consequence of tariffs on Massachusetts companies are far-reaching:

Higher costs of doing business: Companies are paying more for components, raw materials and finished products. Firms often cannot pass these additional costs to their customers. The result is reduced profitability and reduced opportunity to re-invest in the business.

Supply-chain disruption: Companies spend decades developing and refining their supply chains. China is a valuable source for components and finished products. In many cases, these components and products are simply not available in the US, at any price. Quality and quantity requirements necessitate buying from overseas providers. Finding new suppliers is difficult or impossible.

Impact on jobs in Massachusetts: When companies must pay 15 percent to 200 percent more for materials or products, the financial impact is significant. Executives have told us their options are limited. Choosing among no new hires, decreased benefits/raises, or layoffs does not bode well for the Massachusetts economy or for companies themselves.

More competition from foreign manufacturers: One manufacturer told us that his company is already losing sales to foreign competitors who can offer a similar product at a lower price point because the US product carries a tariff and the one made in Europe or Asia does not.

General economic climate: With higher expenses and less income, Massachusetts companies may cut back on spending and investment, leaving employees with stagnant or lower incomes.

AIM has reached out to the US Trade Representative and the Massachusetts Congressional delegation to  express concern about tariffs and to encourage the U.S. to meet with China to develop a bilateral trade agreement.  AIM is in frequent contact with trade experts in Washington in order to help member companies struggling with the negative impact of tariffs. 

It’s time to re-open the gates of free trade that have made Massachusetts, its technology and its products the envy of the rest of the world. We think that’s the best America First policy.

Click here to receive updates on the tariff issue.

Topics: International Trade, AIM International Business Council, Tariff

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