Remembering The Impact Of Bush's Short-Lived Steel Tariffs
MICHEL MARTIN, HOST:
We're going to start the program today looking at a couple of the president's moves this week that upended past policies and shocked even allies and supporters. On Thursday, he signed orders to impose steep new tariffs on imported steel and aluminum, that against the objection of many members of his own party. And in the same day, the president said he had accepted an invitation to meet face-to-face with North Korean leader Kim Jong Un. We'll look at both of these in turn. And we're going to start with the tariffs.
Now, this was something President Trump promoted during his campaign, but the steel came as a shock to some allies, the financial markets and even some supporters. Normally a decision like this comes after a long period of negotiation and consultation. So in the absence of that, we've been canvassing people who are directly connected to those industries to get their perspectives. We were reminded that President George W. Bush imposed tariffs on steel in 2002, which he then rolled back a year later. We were looking for people who remember the impact of that decision, and we found P.J. Thompson. He is the president and second-generation owner of Trans-Matic Manufacturing. That's a metal stamping company out of Holland, Mich. We reached him at the Precision Metalforming Association's annual conference in Tucson, Ariz.
P.J. Thompson, thanks so much for stepping out of the conference to talk to us for a couple minutes.
P J THOMPSON: Thanks for having me.
MARTIN: So I have to ask you, speaking from this conference where there are steel manufacturers represented, there are people who buy steel represented, what's the mood there?
THOMPSON: Well, there's a lot of uncertainty, really, across the industry right now. My company and many like kind companies, we're consumers of steel. We purchase steel. We use steel as a raw material in our component parts that we produce, and then we, in turn, we sell those into markets like automotive, other durable goods products and so on. So there's a lot of concern right now that our primary input to our production process, that being steel, is suddenly going to spike up. I would say that our concerns are not just the increase in price but also the uncertainty about availability of supply.
MARTIN: For people who are unfamiliar with what your company does with metal stamp, would you just describe what your company produces...
MARTIN: ...And how the price affects your bottom line?
THOMPSON: Yeah. Yeah, we make component parts that are custom to our customers' end needs. So, like, if a company is making an automotive system product like an anti-lock brake, we can make the steel sleeves that might go into the control unit. Or if they're making oxygen sensors, we can make the sensor housings. Anything that requires an engineered form component part is what we make.
MARTIN: So as we mentioned earlier, there was a recent experience with steel tariffs, which was in 2002. Do you remember that time? What happened then?
THOMPSON: That was really one of the first times that many of us experienced something, like, you know, tariffs put on a product like steel that explicitly. And back then many companies like Trans-Matic did in fact experience fairly dramatic increases in the cost of material. That went, you know, both ways - some good, some bad. It also enabled us to present price increases to our customers for a very explicit reason, and we were in an environment where price increases were unheard of. But the negative part is the fact that many of the consumers, a company like Trans-Matic, there's kind of an asymmetrical relationship between us, the companies that we buy steel from and the companies we sell our parts to. You know, we're a small, mid-market-sized company. Oftentimes, we don't have the negotiating power on either end to protect ourselves.
MARTIN: Do you remember any of the details during the course of that year when those tariffs were imposed?
THOMPSON: Sure. Like, our company, we were fortunate in that we were able to capture a large amount of these sudden price increases through increases in prices to our customers. Some companies were not so lucky, either because they didn't have the leverage with their customer, meaning their customer could simply say, no, I will not accept that price increase and or I'll just get my part from another supplier. There were also companies who, unfortunately, thought that they could just absorb these cost increases and somehow everything would work out OK. It doesn't work out OK. When a manufacturer has one of their input costs increase like that, it has to be borne eventually by whoever's going to be consuming the product, and that would be the customer. And what we foresee, you know, a very real possibility, is that the consumers in the United States will bear a lot of the price of these tariffs.
MARTIN: That's P.J. Thompson. He's the president and second-generation owner of Trans-Matic Manufacturing. That's a company based in Holland, Mich. And, as we mentioned, he was nice enough to step out from the Precision Metalforming Association's annual conference in Tucson, Ariz.
Mr. Thompson, thanks so much for talking to us.
THOMPSON: Thank you for having me.
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