For more than 70 years, Cass Precision Machining in Brooklyn Center, MN, has been churning out machine parts and other metal products for customers around the world in industries ranging from aerospace to automobiles to agriculture. Now, with steel prices up 50%, Jim Gavin, the company’s president, worries about the future of his 134 employees.
“We have to find a better way to balance trade with outside countries,” Gavin said in an interview with the U.S. Chamber. “Nobody ever wins in trade wars.”
He’s not alone. More than $2.2 billion in Minnesota exports are being threatened by the emerging trade war, leaving many business owners like Gavin wondering what will happen to their international sales. The stakes are just as high for the nearly 788,600 Minnesota residents whose jobs depend on trade. Collectively, they are the collateral damage of the deepening tariff disputes – and the potential damage to America’s industrial and agricultural heartland could get much worse.
After already imposing tariffs on steel and aluminum, the Trump administration imposed approximately $250 billion in tarifs on Chinese imports. China retaliated with a total of $110 billion in tariffs against American-made products.
Garvin says the tariffs hurt his company’s ability to grow, give raises, and share profits with his employees. “The tariffs and the subsequent trade wars are without question our biggest challenge right now,” he says. “It's impacting our profitability, it's impacting our relationships with our customers.”
He says he hopes that the administration will find a better way to balance trade with outside countries, so Case Precision can continue to compete on the global stage.
Less than an hour north of Cass Precision, Traci Tapani, co-president of the Wyoming Machine sheet metal shop in Stacy, MN, echoed similar concerns. She told the U.S. Chamber that as a contract manufacturer, the ability to provide stable pricing to customers is crucial.
“Tariffs are causing the raw material market for steel and aluminum to fluctuate on a daily basis, making it difficult for our customers to determine an accurate price for their products,” Tapani says.
“Our customers buy components and then assembly them into machines,” she added. “If they don't know how much those components cost, it makes it very hard for them to determine the right price for the machines they are assembling and building."
Minnesota’s agricultural industry has been hit hard, too. Hog farmers like Greg Boerboom have gone from projecting a profit to projecting a loss this year. Boerboom, who is already cutting back on his Marshall, MN, farm, hopes Washington’s leaders will stop the tariff escalation and avoid undermining important trade deals, like the North American Free Trade Agreement (NAFTA).
“The tariff basically raises our price by 20 percent to Mexico,” Boerboom told the Star Tribune. “NAFTA and free trade with Mexico is just critical for the U.S.”