Posted on November 20, 2018 · Posted in Industrial / Flex, Investments

As the Trump administration increases tariffs on imported goods, some South Florida manufacturers say they’re already seeing an impact.

That could mean higher prices for consumers — and could slow the tricounty region’s robust economic growth, industry observers say.

“Increased tariffs could mean manufacturers are going to pass it off to the consumer. If they don’t, they’re going to have to eat it and that reduces their profits,” said Matthew Rocco, president of the South Florida Manufacturers Association.

In September, the Office of the U.S. Trade Representative released a list of about $200 billion worth of Chinese imports subject to additional tariffs. The tariffs that began Sept. 24 were 10 percent, with a planned hike to 25 percent on Jan. 1.

In a statement on Sept. 17, President Donald Trump said he was placing additional tariffs on about $200 million of imports from China in response to a U.S. Trade Representative study “that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property.”

The current list of 5,745 goods with increased tariffs include certain consumer electronics products, such as Bluetooth devices; certain industrial chemicals for manufactured goods; certain health and safety products, such as bicycle helmets, and child safety furniture such as car seats and playpens, according to the U.S. Trade Representative’s Office.

Trade talks between the United States and China were back on as of Nov. 13. The United States is holding off on tariffs of imported cars until after trade talks to weigh the impact, according to news reports by Bloomberg and other sources.

“If not resolved, the ongoing trade dispute with China could adversely impact Florida’s important international sector, and increase the price of inputs such as steel needed for construction-related activities,” J. Antonio Villamil, economist and founder of The Washington Economics Group in Coral Gables said in a recent report.

Construction has been booming in South Florida. In October, the state led the nation in new construction jobs. Among the South Florida businesses affected is Miramar-based JL Audio. The speaker manufacturer, which has been adding jobs and brought back a manufacturing line to Miramar from China in 2015, relies on Chinese import parts to make its systems here.

“The policies put out there to help domestic manufacturers is actually hurting us,” said Robert Oxenhorn, director of finance and accounting for JL Audio.

Previously, JL Audio’s tariff on the parts it needs from China was only 1.2 percent. On Sept. 24, an additional 10 percent went into effect. And that is expected to jump 25 percent, for a total 26.2 percent in tariffs, on Jan. 1, he said.

“We have absorbed some of the tariffs,” Oxenhorn said. “The company raised its prices on Nov. 1 to offset a portion of the tariffs. But there is only so much we can increase prices before affecting demand. It’s going to be a balancing act. The impact is pretty substantial. We have a loudspeaker that costs us $100 to build, and $50 of that could be parts that could come from China,” Oxenhorn gave as an example.

That could stymie JL Audio’s growth. The company, founded in 1975, has added 73 new jobs since 2015 and has received $27,750 in tax refunds of the $90,000 it is eligible for from state and local government, based on its job creation, according to Florida’s economic development incentives portal.

D&D Welding & Fabrication, a metal fabricator in Fort Lauderdale, also is being affected by higher tariffs, but in a different way.

“Most of the company’s steel comes fromNorth America and Canada, but U.S. suppliers raised their prices when the tariffs were increased,” said Danny Massa, president of the business that employs 90. “When they announced the tariffs, the U.S. steel mills jumped on the bandwagon.”

Prices are changing so rapidly that suppliers’ quotes are generally good for only 24 hours. Meanwhile, D&D Welding’s bids for jobs with general contractors are good for three months. As a result, D&D can lose money or undermine customers’ confidence if they choose to pull out of a job or re-quote a bid, when supply prices soar.

“Managing the situation has been very challenging,” Massa said.


Source: SunSentinel

About the Author