The Indiana Chamber of Commerce is cautioning that the recent tariff hikes on Chinese goods could lead to devastating effects for the Hoosier businesses.

“We are hearing from a variety of members – from all kinds of manufacturers to agricultural companies – that this latest tariff war with China could have serious business implications for them and even throw some into a fight for survival,” Indiana Chamber President Kevin Brinegar said Thursday.

The Trump administration has increased an existing 10 percent tax, enacted last year on many imports, to 25 percent. China has said it will retaliate with its own similar tax increase on $60 billion in U.S. goods.

“This is such a big, big deal for Indiana, which annually exports $1.1 billion of goods to China,” Brinegar said.

Among the top U.S. exports to China are gear boxes for vehicles, accounting for $94 million in exports, and medical products like needles and catheters, at $57 million in exports, Brinegar said.

The state chamber, Brinegar said, agrees with a U.S. goal to obtain fair trade relations with China, “but our members are concerned that this isn’t necessarily the right way to go about that. Effectively, the [Trump] administration is effectively gambling with other people’s money, i.e., their money,” he said of Indiana business.

“While the argument is this will be short-term pain for long-term gain, there is concern that this could be long-term gain for little or no gain,” Brinegar said.

How the increased tariff will directly impact the Wabash Valley is uncertain.

“We have not been able to get information on how the tariffs might effect us,” said Brad Stewart, vice president of marketing at North American Latex in Sullivan. The company makes medical grade latex for products such stethoscope tubes, ostomy collectors, urinary bags and air inflation bladders.

The Tribune-Star made calls Thursday seeking comment from ADVICS Manufacturing and Thyssenkrupp Presta, both of which are automotive part makers located in the Vigo County Industrial Park.

Steve Witt, president of the Terre Haute Economic Development Corp, said he cannot speculate how any local manufacturer would be directly impacted.

“Generally speaking, tariffs, or even the threat of tariffs, can be seen as a negotiating tactic to try to bring another party to the table to work through a trade disagreement or to engineer a compromise. I think that President Trump believes that any possible short-term pain created by the new tariffs on Chinese goods coming to the U.S., as well as U.S. exports entering China, will be worth it in the long run to obtain a more favorable balance of trade with China,” Witt said.

“In a general sense, as a country, we certainly export agricultural products to China, so our Wabash Valley agricultural community will likely be negatively impacted by tariffs placed on U.S. agricultural exports to China.

“Prices on corn and soybeans are already down rather significantly from recent years, so additional tariffs on U.S. agricultural exports will not help that situation in the short-term,” Witt said.

In addition to the tariffs on Chinese goods coming into the U.S., the Trump administration has also been considering tariffs on imported automobiles and parts, however, the administration has delayed a decision on whether or not to impose a 25 percent automobile industry-related tariff for another six months.

“Such auto-related tariffs could, potentially, negatively impact ADVICS and ThyssenKrupp locally in regard to the importation of components that go into their finished products,” Witt said. “Also, all domestic manufacturers of automobiles and systems utilize imported parts/components from elsewhere to one degree or another. But, again, a negotiating tactic at present.”

In addition to the tariffs on Chinese imports along with the automobile industry-related tariffs currently under consideration, Witt said the Trump administration “says it is getting closer to an agreement with Canada and Mexico which could lead to the roll-back of tariffs on aluminum and steel that were imposed last year, which is one of the remaining obstacles in the way of the formal adoption of the United States – Canada-Mexico Agreement, which is the trade agreement that replaced the North American Free Trade Agreement.

Whether or not the current tariffs on Canadian and Mexico steel and aluminum remain in place “could have a significant impact on our domestic steel and aluminum industries, one way or another. The ratification of USCMA could lead to additional trade opportunities for domestic suppliers in a variety of industry sectors, however,” Witt said.

“Trade wars are tricky things that often lead to unexpected ramifications, both good and bad,” Witt said. “On the other hand, should the Chinese and automotive and Canada/Mexico trade situations be favorably resolved in the near future, the U.S. economy could be poised for a significant period of growth the likes of which few of us have seen in our lifetimes,” Witt said.

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