North Dakota manufacturers left to weather uncertainty of trade war
Steel and aluminum prices are rising in the region, and that means higher prices for farming equipment, recreational vehicles, motorhomes and more.
With tariffs in place on steel and aluminum from U.S. allies since early June and threats of retaliatory tariffs from Canada in July, the North Dakota Trade Office said it already has noticed a 15 to 20 percent increase on base prices for steel and aluminum.
North Dakota manufacturers who rely on these metals know they're already paying more, but they're less certain what price hikes will eventually mean for business and consumers.
Lee Holschuh, president of Mid-America Steel with offices in Fargo and Bismarck, said it "literally changes overnight." He's noticed steel prices fluctuating since the beginning of the year, when tariff talk started leaking into the news.
"Uncertainty in the marketplace is never a good thing, for any product line," he added. It's especially poor for regional steel and aluminum manufacturers, who often sell parts made-to-order. Dave Young, president of Young Manufacturing Inc. in Grand Forks, said he could give a customer a quote for an item one day, but when the customer needs the item three weeks later, the material could cost more.
"We might have to eat the difference, or go back to the customer," Young said.
Simon Wilson, executive director of the NDTO, said some of the businesses his office represents have expressed a similar message of uncertainty. Of course, not every manufacturer fares the same.
"It depends on where they're at in their business cycle and who they import from," Wilson said. "There's some that are in it really deep, and their prices have increased."
The most Wilson said he can do for manufacturers is explain what's going on.
"A lot of it's just information—trying to keep up with the information that's out there, and trying to keep information accurate."
Misinformation in the news and in conversation also lends to the market's uncertainty right now, according to Wilson, who said he works as hard as he can to provide the most accurate and recent information because he knows that's what manufacturers are basing their prices on.
The NDTO takes its support a step further by collecting concerns from manufacturers and bringing them to the attention of their elected officials.
"It's very confidential, a lot of times," Wilson said of what businesses tell him.
Manufacturers are weary when it comes to discussing their uncertainties, because they don't want to discourage customers or provide leverage for competitors. However, Wilson said legislators need to know what's going on to make a change.
The best solution, he said, would be slowing things down and having a candid discussion on real ways the United States can improve trade. Wilson said the country needs to "get the right people from different countries to sit around and hammer out some solutions."
"We're all about fair trade," Wilson said of the NDTO, "and fair trade isn't all these tariffs. It's letting North Dakota businesses compete on a level playing field."
North Dakota legislators have taken state trade concerns to Congress. Wednesday, Sen. John Hoeven, R-N.D., released a statement saying he had spoken with President Trump about improving trade deals, saying "We need to keep open valuable export markets and take down barriers so that American products can continue to compete."
Following the president's $200 billion tariff announcement for China on Tuesday, Sen. Heidi Heitkamp, D-N.D., released a statement that outlined the damage such a barrier would mean for North Dakota producers, specifically farmers and ranchers with business in China.
Although he can't recall too many trade wars in recent history, Young said the situation isn't unfamiliar; he's noticed several cycles like this in the last couple decades, the latest round in 2008.
Sometimes a nearby mill will shut down, for example, and his company will have to buy supplies somewhere else, for more money. During the more difficult cycles, Young said, it can be hard to get a hold of any material at all.
"It's one thing if you can buy material at a high price," he said. "But if you can't get any into your shop, then you can't sell anything."
Eventually, Young said he suspects prices will stabilize.
"Stabilize, as in level out over time," Young clarified. "Maybe they'll be higher, but at least they'll be stable enough for predictability."