Canadian Manufacturing

Tariff fallout: Reports show trade dispute affects U.S. companies

Fortune 500 firms and small businesses alike are dealing with higher costs and other headaches


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NEW YORK—Manufacturing companies including small businesses say they’re paying higher prices for raw materials and seeing longer wait times for deliveries of goods that must go through customs because of new U.S. tariffs on imports from big trading partners.

That comes in a report last week from the Institute for Supply Management, showing that manufacturing remained strong in July, but the industry group’s members are feeling the effects of the trade disputes.

“Respondents are again overwhelmingly concerned about how tariff-related activity, including reciprocal tariffs, will continue to affect their business,” ISM executive Timothy Fiore said in a statement.

The U.S. has imposed tariffs of up to 25 per cent on thousands of goods including raw metals and finished products from China, Mexico, Canada, India and the European nations, and those countries have retaliated with tariffs of their own on U.S. products ranging from agricultural products to boats. The ISM said some of its members have said orders from China had fallen, that steel had become more expensive and that companies have had to take on extra inventory, an added cost, in hope of avoiding pricier raw materials.

Quarterly earnings reports from Fortune 500 companies showed that they were contending with fallout from the tariffs. Ford Motor Co. said its commodities costs rose by about $300 million during the second quarter. Smaller companies’ earnings are also vulnerable—they pay proportionately higher prices than large corporations because they’re less able to buy in bulk, and they have proportionately less revenue to absorb the price increases.

Other big companies including General Motors and Harley-Davidson have reported that their costs are up sharply because of the tariffs.

The Commerce Department’s initial estimate of second-quarter economic growth revealed showed the impact the trade dispute has had on farms, which include small businesses.

While the department said the economy grew at an annual rate of 4.1 per cent from April through June, that figure was bloated by soaring soybean exports—farmers stepped up their sales to China, hoping to avoid retaliatory tariffs that country imposed on U.S. goods.


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