International Door & Operator Industry

MAY-JUN 2018

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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MANAGEMENT 36 International Door & Operator Industry™ (continued from page 34) How Might the Tariff Ploy Play-Out? The President cited "national security" as the primary reason for establishing the tariffs, which probably provides "wiggle room" to rescind the proclamation should negative reaction (such as cancellation of a major construction project ) outweigh the positive response from domestic steel and aluminum producers. However, the last time the U.S. restrained imports citing national security concerns was a 1983 tariff on machine tools. That was prior to the World Trade Organization (WTO) coming into existence in 1995. Thus, the present stance is really an untested position. The general reaction to the tariff announcement was strong disapproval from firms and trade groups as diverse as automobile manufacturers, breweries and even the U.S. Chamber of Commerce. Jack Gerard, CEO of the American Petroleum Institute, stated that "… the actions taken are inconsistent with the administration's goal of continuing the energy renaissance and building world-class infrastructure …" There is widespread fear that tariffs will complicate already delicate relationships with China, South Korea and other countries. On the other hand, many observers have stated that the tariffs are simply a negotiating maneuver for impending NAFTA discussions, and that could prove to be the case. In 2009 only 22.7% of all steel used in the U.S. was imported, while the proportion grew to 32.6% in 2017. 5 Steel is imported from 85 different countries, with the largest sources being Canada, which supplies over 16.0% of imported value, Brazil, 13.0%, South Korea 10.0% and 9.0% each from Russia and Mexico. Of the aluminum used by U.S. manufacturers, almost 90.0% is imported, with Canada and Mexico combining to supply nearly 41.0% of the total (Canada alone over 36.0%). China is the second largest aluminum source with 15.1%. Obviously, a great many divergent interests are at stake in any effort to reformulate international trade. It is the potential cascading effect of tariffs that concern most business interests – e.g., can the U.S. afford to risk aircraft production employment to generate a few hundred aluminum smelter jobs, or risk carpenter and plumber jobs for the sake of boosting domestic output of structural steel? Frankly, no one really knows how the situation will play- out at this early stage of the issue. If the tariffs or some modifications thereof stay in place, it is almost axiomatic that some aspect of U.S. exports will suffer (probably automobiles or processed foods). On the other hand, can the administration withdraw the tariffs and save face? Stay tuned and we will explore the subject further. 5 U.S. Department of Commerce, "Global Steel Trade Monitor," March 2018 TARIFFS John E. Zoller and David H. Bowen comprise Zoller Consulting, Inc. of Wooster, Ohio. Zoller Consulting provides consultation of managerial effectiveness and financial performance of construction related businesses. They also offer customized seminars and training sessions. In addition, Zoller Consulting provides acquisition management, including finding buyers or sellers, locating funding sources, transaction structuring, and negotiating and organizing the transition to new ownership. Contact Zoller Consulting, Inc. at 330.262.8500 or John@ zollerconsultinginc.com.

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