The landscape surrounding tariffs and international trade has been at the forefront of conversations since President Donald Trump came back into office in January.
Within the last week, the U.S. and China agreed to a temporary pause on triple-digit tariffs as the two countries work to negotiate a trade deal.
Despite the pause, the administration’s tariff policies and trade negotiations have led to increasing uncertainty for businesses.
To get a better understanding of tariffs and their impact on businesses in Connecticut, Ulbrich Steel board chair Chris Ulbrich joined CBIA president and CEO Chris DiPentima May 5 on the CBIA BizCast.
Ulbrich Steel imports about 30% of its products from outside the U.S. including China and Europe.
“We’re trying hard to figure this all out,” Ulbrich said.
And Ulbrich added that the economy is just starting to feel the increased costs from the tariffs.
Ulbrich said the company recently shipped metal from China at $100 a pound, but by the time it reached the U.S. the actual cost was closer to $300 a pound.
He added that the only company in the U.S. that makes the product sells it for $400 a pound, leaving companies with a difficult decision to make.
“Then the trick is—the domestic producers—are they going to tailor what they need?” Ulbrich asked. “Will we start seeing them increasing their prices?”
Ulbrich added that they are currently “a couple million dollars behind” with costs that haven’t moved down the supply chain.
But he said the added costs of tariffs will impact customers.
Ulbrich said the way their supply chain flows, it can take six-to-eight weeks for them to bring in raw materials and another six-to-eight weeks to get it out of their facility to the customer.
“You’ve got to make the product,” Ulbrich said. “You’ve got to collect the money from the customer.”
Ulbrich said adding to the unknowns is what happens to the products they ship to China from Connecticut.
“All our orders are basically on hold because the customer, the Chinese customers, do not want to pay 145% tariff on our product,” he said at the time of the recording.
Ulbrich said he can see positives from Trump administration trade policies.
“We are seeing reshoring,” he said. “People want to buy from the U.S. So there are jobs coming back.”
Still, Ulbrich said that reshoring brings its own set of challenges and uncertainty.
A lot of the materials they use are not made here, noting that 90% of stainless steel rod is imported.
“You don’t build a billion-dollar steel mill here overnight,” he said.
Ulbrich also said that a big concern is finding the workforce needed to take on the potential new demand.
“Even if all this works, and they negotiate great treaties this week and in the months ahead, and more reasonable tariffs are put in, we need a workforce,” he said.
“Where are the people going to come from?”
With 82,000 open jobs, Connecticut is already dealing with a labor shortage.
Ulbrich said the state can help by addressing important issues like housing, workers’ compensation, and finding ways to develop and get polluted sites back on municipal tax rolls.
“I’ve heard Gov. Lamont say, ‘76,000 people, if we can find jobs for those people, that’s 76,000 people paying taxes,’ and it’s wonderful,” Ulbrich said.
As the tariff situation unfolds, Ulbrich said its important for business leaders to meet with their employees regularly.
“Everybody knows,” he said. “They see on the plant floor maybe the jobs are half what they used to be.
“Full communication, I think, helps so much.”
Related Links:
Ulbrich
Website: https://www.ulbrich.com/
LinkedIn: https://www.linkedin.com/company/ulbrich-stainless-steels-&-special-metals/
Chris Ulbrich LinkedIn: https://www.linkedin.com/in/chris-ulbrich-66a21b11/
CBIA
Website: https://www.cbia.com/
LinkedIn: https://www.linkedin.com/company/cbia/