Trade Tariffs Halt U.S. Small Manufacturers’ Hiring, Investments

The ripple effect of the U.S. administration’s trade tariffs has struck the country’s small manufacturers, Reuters reports, as they scale back hiring and investments due to rising import costs.

Following President Donald Trump’s implementation of steel and aluminum import taxes in March, Reuters began interviews with several small- to mid-sized manufacturing executives to hear their thoughts.

The report, released May 4, revealed a chain reaction of sorts: The tariffs are increasing raw material costs for manufacturers and creating supply delays, leaving manufacturers unable to compete with foreign companies. Now, manufacturers are proceeding with caution before making any decisions about hiring new employees or investing in future projects.

Among Reuters’ interviewees was president Mike Schmitt, of the metal fabrication company Metalworking Group in Ohio, who said that the company was hoping to spend roughly half a million dollars on equipment and new hires in 2018. However, contracts were repriced and renegotiated after the material price hike, so the plans were pushed back to 2019.

“While these manufacturers lauded the administration’s push to make U.S. businesses globally competitive through measures such as the tax overhaul and a deregulation drive,” the report said, “they complained that the steel and aluminum tariffs along with the escalating trade spat with China were undercutting those benefits.”

The latest results from the CIBZ Small Business Employment Index (SBEI) concurred with the Reuters report, showing a 0.21% decline in April hires, according to Business Wire. Surveying thousands of companies with 300 or fewer employees in the U.S., the SBEI showed more than a quarter of small businesses decreased their employee count after a significant boost in March hires of about 1.4%.

In a press release, CBIZ Employee Benefits’ Executive Vice President Philip Noftsinger said small business hiring usually increases in April.

“Small businesses may be hitting the pause button ahead of seasonal spring hiring,” Noftsinger said in the release. “… We’ll look toward the later spring months to create any consistent message of a slowdown in the labor market.”

-Andrew Michaels, editorial associate

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