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Trump's trade war hits home for NH businesses

New Hampshire Union Leader

July 15. 2018 2:38PM
The Little Bay Lobster Co. in Newington had shipped more than 50 percent of its lobsters to China - or around 50,000 pounds a week - until China imposed a 25 percent tariff June 6 on lobster from the U.S. The company's orders from China then evaporated. (The Little Bay Lobster Co)

A Newington company that shipped 50,000 pounds of lobster a week to China received no orders after a 25 percent tariff was slapped on U.S. lobsters heading to China.

A Bedford Realtor said prices for new houses he markets have increased thousands of dollars because of lumber and steel tariffs that make housing materials more expensive.

And a Thornton company that sells equipment measuring wind and rain is giving up plans to expand.

Trade fights between the United States and both Canada and China are making some goods costlier, leaving some Granite State companies to change their plans - putting jobs at risk in some cases.

One study showed new tariffs threatened $29 million of New Hampshire exports, according to the U.S. Chamber of Commerce. The state recorded $5 billion-plus in exports last year.

"On the face, it seems reasonably small, but we don't know where this is leading," said Taylor Caswell, commissioner for the state Department of Business and Economic Affairs. "Is it leading to a deeper trade war?"

The same day as Caswell's comments, the U.S. government announced its plan to impose a 10 percent tariff on another $200 billion worth of Chinese imports.

Andrew White is owner of Comptus in Thornton, the company that makes wind and environmental sensors, transmitters and controls. "If the U.S. continues down the path toward a trade war, the escalation of costs on both sides will put our sales at risk," White said.

Dover economist Brian Gottlob said the $200 billion in proposed tariffs "will likely make the tariffs more apparent to consumers."

Businesses are working to adjust.

"The worst thing you can do to a business is inflict a higher degree of volatility on it," Caswell said.

In Newington, the Little Bay Lobster Co. had shipped more than 50 percent of its lobsters to China - or around 50,000 pounds a week.

But after China imposed a 25 percent tariff this month on U.S. lobster exports, things changed.

"We ship to China every week, and all of a sudden we didn't have any orders," manager Amy Shafmaster said. "The Canadian lobster is so much cheaper than the U.S. lobster now."

The lobster business has been shipping to China for the past half-dozen years and will now try to look for new or former customers within the United States.

"You can't change your own business model in two weeks," Shafmaster said.

"We're trying to pay our (75) people even though they're really not working, to hang in there and see how it all will shake out," Shafmaster said. "We fortunately can afford to do that."

"Who knows how long we can do that for. It's not realistic to keep doing that for a long period of time," Shafmaster said.

Lumber tariffs, which took effect last year, and steel tariffs, which boosted prices for heating and air conditioning units, are causing new homes to cost more, according to Moe Archambault, owner and broker at Moe Marketing Realty Group in Bedford.

Home prices have gone up 1.5 percent recently - or $6,000 on a $400,000 home - in new developments in Hooksett and Dunbarton that he markets.

"It's a little here, a little there," Archambault said. "It does cut into your cost of business, so you have to transfer it over to the consumer."

And more increases are possible.

"It hasn't affected sales yet, but if it continues it may eliminate some people" from buying, he said.

Taylor Caswell, the commissioner of the N.H. Department of Business and Economic Affairs, is seen in his office last year. (DAVE SOLOMON/UNION LEADER FILE PHOTO)

Halting growth

The United States imposed a 25 percent tariff on Chinese components that Comptus imports, hurting the company's plans to increase its product line and expand its current three-person workforce.

"I have to rewrite my business plan for the next four years," White said.

For the first six months of 2017, sales to China accounted for 18 percent of total sales, compared to 49 percent for the same time frame this year.

"Our U.S. suppliers' goods have components from China that are subject to the tariffs, so our costs will go up if we purchase domestically. In fact, we have been put on notice from one supplier that they are passing through the costs directly to their customers effective immediately," White said.

"If we purchase directly from China, the tariffs affect the cost of our finished goods," White said. "The end result is incremental increases in goods and services across the board. This will result in generating the real risk of setting off an inflationary spiral."

Preparing for change

Nashua's BAE Systems, one of the state's largest employers, said all U.S. defense contractors must comply with various federal acquisition rules, regulations and laws, many of which specify requirements for materials.

"We are monitoring what impact could occur as a result of tariffs within our broad U.S. supplier base, and our customers," the company said in a statement.

Meanwhile, Eco Touch, a Dover company of 11 employees that makes cleaning products, sped up production so a distributor could stock up before a 10 percent tariff kicked in on July 1 for his products sold in Canada.

"We were forced to scramble in production because the distributor wanted to get as much as he could," co-founder James Dudra said.

"We will not necessarily be competitive with brands that are made in Canada," Dudra said.

"From a budgetary perspective, we don't how we'll plan our cash flow, which items we should bring in larger quantities to offset a future tariff," Dudra said.

"It definitely changes every day whether the President sends out a tweet or another country responds," Dudra said.

The company might need to absorb some of the tariff costs.

"We won't have to lay off people," Dudra said, but "it does eat into our profit, our bottom line."

He applauded the Senate for passing a nonbinding resolution last Wednesday seeking more say on tariffs.

"There needs to be larger checks and balance on these types of decisions," Dudra said.

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