MEQUON, Wisconsin (AP) — The trade war between the United States and China has made for a nerve-wracking summer of uncertainty in Wisconsin, where manufacturing has long been in decline yet remains a vital part of the state’s economy.
At Johnson Level and Tool in suburban Milwaukee, the Trump administration’s thrust-and-parry trade moves with China and other countries have left the company bracing for up to USD3.7 million in extra costs annually because of higher tariffs on imports, including some of its levels that are made in China.
The company has a range of options to try to blunt its higher costs – from raising prices on the levels it sells to big box stores to potentially moving some of its manufacturing now done in China to another country to avoid tariffs.
But as companies across America struggle to adapt to the higher prices from import taxes, the options that officials at Johnson Level and Tool face underscore there are no easy answers – and no surefire way to avoid paying more for indispensable imports. As Trump’s tariffs on countless US imports take root, some of the largest US corporations have warned that higher prices are coming.
For many such companies, a key internal question is whether to absorb the higher costs themselves, at least temporarily, to avoid losing customers — or raise prices immediately. Johnson Level has chosen to raise its prices for the stores that buy its products by eight per cent to 10 per cent to match its higher costs imposed by the tariffs.
Levels are a basic tool essential for things like getting doorways square and hanging pictures straight.
Though Johnson manufactures some of its levels in Mequon, it imports others that are cheaper to make in China because their tooling machines cost just one-tenth what they do in the US, said Paul Buzzell, the company’s chief financial officer. About half of the levels the company sells are imported from China.
The uncertainty over how long the tariffs will remain in place has made it harder to find a solution, Buzzell said. He said he always assumed that if the US increased tariffs, it would give businesses a year or two to prepare by making adjustments with their suppliers.
That was the assumption, he said, when the company “started investing in our suppliers and relationships in China.
“We have this uncertainty, and almost overnight our business really has changed and so the competitive landscape is different,” Buzzell said.
The first tariffs on Chinese steel and aluminium in June didn’t affect Johnson Level; the company doesn’t import those raw materials. But in July, a second round of tariffs on USD50 billion worth of Chinese imports covering hundreds of items, including all the levels and laser levels the company imports, meaning they were now paying 25 per cent more for those.