Wounded trade war: companies improvise to avoid costs …

WASHINGTON (AP) – In Rochester, New York, a furnace manufacturer for semiconductor and solar power companies is relocating its research and development to China to dodge President Donald Trump's import taxes – a move that threatens a handful of his 26 US jobs.

In the San Joaquin Valley in California, the CEO of a company that manufactures precision components for biomedical and chip manufacturing makes bitter jokes about the fact that he & # 39; a non-profit organization & # 39; and maybe should delete jobs.

And east of Detroit, a metal stamp company is losing the car industry to foreign rivals because Trump steel prices have raised metal prices in the United States.

Trump often says that the taxes he has levied on imports – steel and aluminum and almost half of all goods from China – have overcharged the American treasury with new income. "We are currently withdrawing $ billions in fees," he tweeted last month. "MAKE AMERICA RICH AGAIN."

But rates like those from Trump represent barely 1 percent of federal revenue. It is actually companies such as Linton Crystal Technologies in Rochester, Accu-Swiss Inc. in Oakdale, California, and Clips & Clamps Industries in Plymouth, Michigan, who pay the price for his trade wars.

Rates tend to increase the costs of the material of these companies and to keep them at a competitive disadvantage compared to foreign rivals who are not burdened by import taxes. And their exports can be taxed when other countries pay back with their own rates.

FILE- This June 28, 2018, photo shows rolls of finished steel in a facility in Granite City, Illinois. The president often boasted that the taxes he imposed on imports, steel and aluminum and nearly half of all goods from China, have showered the American treasury with new revenue.

FILE- This June 28, 2018, photo shows rolls of finished steel in a facility in Granite City, Illinois. The president often boasted that the taxes he imposed on imports, steel and aluminum and nearly half of all goods from China, have showered the American treasury with new revenue. "We are now receiving $ billions in rates", President Donald Trump last month. "MAKE AMERICA RICH AGAIN." But the fact is that rates such as those from Trump account for only 1 percent of federal income. (AP Photo / Jeff Roberson, file)

"Wars are messy," said Todd Barnum, chief operating officer at Linton Crystal Technologies. "All troops are hurt."

In December 2017, Trump gave these companies and others a gift when he signed a measure that brought the corporate tax rate from 35 percent to 21 percent. The next month, however, he began to reduce import duties – starting with solar panels and dishwashers, before switching to steel and aluminum and then hit $ 250 billion in Chinese goods.

"Thanks for the tax cut," said Jeff Aznavorian, president of Clips & Clamps. "However, I will not benefit because I will not have any profit to pay taxes." For his company, "tariffs have completely undermined everything that is right, which involves tax reductions."

The higher costs resulting from Trump's tariffs still have to do a lot of general damage to a still robust American economy, which is less dependent on international trade than most other countries. Fueled by lower taxes, the economy grew from July to September with an impressive annual rate of 3.4 percent, after rising 4.2 percent in the previous quarter. And employers added 2.6 million jobs last year, most since 2015.

And although many companies are hurt by the confrontational trade policy of the president, some of them benefit. For example, an aluminum smelter in Missouri reopened a new owner this year and contributed aluminum rates to reduce foreign competition and 450 jobs for New Madrid County.

But for many companies the rates are rising costs, which entails hardship and uncertainty. The manufacturing index of the Institute for Supply Management plummeted to the lowest point in more than two years last month, partly due to the tariffs. And the Federal Reserve seems more and more worried that damage through the trade war will undermine the economy.

The potential cost of Trump's rate campaign is clear at the beginning of this month when Apple warned that trade threats with Beijing hurt its operations in China – an important reason why revenue in the first quarter would fall below expectations.

"It will not only be Apple," acknowledged Kevin Hassett, chairman of the White Board of Economic Advisors, CNN. Companies with significant sales in China will "next year reduce their revenues until we have a deal with China."

Trump's rates would theoretically help the American producers by increasing the prices of goods sent by their foreign competitors from abroad. But tariffs, a tax paid by importers, can be counter-productive. They tend to hurt US companies buying foreign goods for resale or for use as components in US products.

Many American importers are faced with a tough choice: they can pass on their higher costs to their customers and run the risk of losing their business. Or they can absorb the extra costs themselves and sacrifice profit.

And rates naturally invite retaliation. The European Union, Canada, Mexico and others have taken revenge against American products as a refund for Trump's steel and aluminum tariffs. China has imposed rates for $ 110 billion of American goods.

Among the products on the Beijing hit list are American soybeans, a major export among Trump supporters in the American mainland. To alleviate the pain, last year the board gave aid to farmers worth $ 11 billion – money that reduced the trade war's contribution to the Treasury. Peter Meyer, head of grain and oilseed analysis at S & P Global Platts, said that the payments allowed soy farmers to make good their losses from the trade war.

But the damage can take longer. Before the trade enemies broke out, China bought 60 percent of American soybean exports. Now it is for soya beans to Brazil and other countries.

"It takes months to years to cultivate a customer and only a few weeks to make them angry," Meyer said. "The concern is now that we are angry with the Chinese and that they will leave."

Linton Crystal Technologies is being challenged by tariffs that lie ahead as well as go. The components shipped to an assembly plant in Dalian, China, are subject to import taxes when they arrive in China. And the composite furnaces that he sends back to Rochester are being hit with the Trump tariffs at the American border.

The US import tax on an $ 2 million kiln is $ 500,000. So, out of desperation, the company has decided to move operations to China to avoid tariffs. And it is planning to dismiss four or five American workers.

"It just does not make any sense for me to send it back here, so I can be punished for half a million dollars," Barnum said.

In the meantime, the higher costs are detrimental to Linton's business. Turnover is expected to fall by 25 percent in 2019.

Accu-Swiss, which buys imported stainless steel on the price list, negotiates with customers to split the higher costs. It also tries to make its activities leaner. For example, it has redesigned its California factory so that production can continue overnight when the lights are off and the employees are gone. Nevertheless, it also expects a 25 percent drop in turnover this year.

"I only hope against the hope that this thing will disappear," said CEO Sohel Sareshwala. "I support myself and almost become a non-profit organization."

Clips & Clamps, Michigan's car supplier, buys steel from American producers who do not have to pay the rates. But domestic steel suppliers have been able to raise their prices sharply because Trump's tariffs have distributed foreign competition.

"I'm losing business with competitors outside the United States," Aznavorian said, "and I'm losing it because of commodity prices."

At the beginning, Sareshwala and Aznavorian said they assumed that Trump's metal rates were merely a negotiating tactic, partly intended to pressure Canada and Mexico to embrace a new North American trade pact. But the rates remained intact even after Trump signed a renewed regional agreement in November.

"My mouth fell open," Aznavorian said. "I thought: you're kidding." "

Now he can not say whether the rate squeeze will ever end. "The uncertainty is terrible," he said.

___

Follow Paul Wiseman on Twitter at https://twitter.com/PaulWisemanAP

FILE - In this July 26, 2018 record photo president Donald Trump speaks at the Steel Granite City Works plant in Granite City, Illinois. The president often says that he levies taxes on imports, steel and aluminum and nearly half of all goods from China have showered the American treasury with new income.

FILE - In this July 26, 2018 record photo president Donald Trump speaks at the Steel Granite City Works plant in Granite City, Illinois. The president often says that he levies taxes on imports, steel and aluminum and nearly half of all goods from China have showered the American treasury with new income.

FILE – In this July 26, 2018 record photo president Donald Trump speaks at the Steel Granite City Works plant in Granite City, Illinois. The president often says that he levies taxes on imports, steel and aluminum and nearly half of all goods from China have showered the American treasury with new income. "We are now contributing $ billions to the rates," Trump tweeted last month. "MAKE AMERICA RICH AGAIN. & # 39; & # 39; But fact is that rates like those of Trump make up barely 1 percent of federal revenue. (AP Photo / Jeff Roberson, file)

FILE - In this photo picture of July 5, 2018, a ship to shore crane prepares for a container vessel of 40 feet on a container ship in the port of Savannah in Savannah, Georgia. The higher costs resulting from the tariffs are still causing a lot of general damage to a still robust American economy, which is less dependent on international trade than most other countries. Under the impetus of lower taxes, the economy grew from July to September with an impressive annual percentage of 3.4 percent, after having risen 4.2 percent in the previous quarter. And employers added 2.6 million jobs last year, most since 2015. (AP Photo / Stephen B. Morton, File)

FILE - In this photo picture of July 5, 2018, a ship to shore crane prepares for a container vessel of 40 feet on a container ship in the port of Savannah in Savannah, Georgia. The higher costs resulting from the tariffs are still causing a lot of general damage to a still robust American economy, which is less dependent on international trade than most other countries. Under the impetus of lower taxes, the economy grew from July to September with an impressive annual percentage of 3.4 percent, after having risen 4.2 percent in the previous quarter. And employers added 2.6 million jobs last year, most since 2015. (AP Photo / Stephen B. Morton, File)

FILE – In this photo picture of July 5, 2018, a ship to shore crane prepares for a container vessel of 40 feet on a container ship in the port of Savannah in Savannah, Georgia. The higher costs resulting from the tariffs are still causing a lot of general damage to a still robust American economy, which is less dependent on international trade than most other countries. Under the impetus of lower taxes, the economy grew from July to September with an impressive annual percentage of 3.4 percent, after having risen 4.2 percent in the previous quarter. And employers added 2.6 million jobs last year, most since 2015. (AP Photo / Stephen B. Morton, File)

Sorry, we currently do not accept comments on this article.

.