Schweitzer Engineering Laboratories published an open letter on March 3 commenting on the aluminum and steel tariffs employed by the Trump Administration and directed towards Canada and Mexico. The day after the letter was released, the Canadian and Mexican flags were raised at SEL.
The tariffs had already begun impacting SEL as of between March 3 and 4. Three equipment shipments worth $2 million that were assembled in Mexico and manufactured in the U.S. were stalled at the border. SEL paid about $300,000 in tariff taxes to the government in order for the equipment to cross the border, Schweitzer said.
“When somebody imports something from Mexico or Canada, when it reaches the border, the Customs and Border Patrol people charge the importer a 25% tax to bring it into the U.S. and every one of those dollars goes directly into the U.S. Treasury,” he said. “[SEL] had to pay the tax right at the border. [We] can’t collect it from the customer because we had bid and won the work competitively months before, so this is a tax on hardworking people.”
Schweitzer collaborated with Washington State representative Michael Baumgartner on March 6 to write an article with the Spokesman-Review discussing how “tariffs are taxes.”
“[Taxes are] applied to goods imported from other countries, similar to a sales tax, is a ‘debated issue.’ Though, it could be attributed to Trump’s expressed support for tariffs since the 1980s,” said economics assistant professor Dr. Christopher Clarke.
Trump’s tariffs against Canada and Mexico are attempts to address issues related to fentanyl and immigration, Clarke said. However, since these problems have very clear aims, it is more likely these tariffs will not fix the problems they are intend to. Instead, they will likely run counter to any aims of boosting U.S. production.
“SEL is a thriving American manufacturer. If we’re not interested in their success, then we’re not interested in protecting American manufacturing,” Clarke said.
These issues are a separate problem, Schweitzer said. It defies logic to think taxing hard-working people and businesses has anything to do with what others are up to.
“We will solve this problem better with Canadians, Americans and Mexicans working together to solve it as friends, neighbors and allies,” he said. “NAFTA has been working, it’s brought us closer together than ever…we believed that this was something we could trust. Half of our systems are built in the US and half are built in Mexico and it’s a rather balanced thing.”
Any current and potential tariffs are more likely going to harm American companies and manufacturers, Clarke said.
“Our comparative advantage is advanced manufacturing, such as SEL. Highly engineered, very advanced, cutting-edge, physical technology. They buy steel, aluminum and other raw goods that are being imported,” he said. “The way we’re doing it, with the bluster, with the uncertainty, is harming investment … there’s a huge amount of uncertainty, [manufacturers] are going to pull back. This is harming American manufacturing, both through higher input prices (i.e. steel and aluminum) and greater uncertainty, which will lower investment.”
All of this generates significant uncertainty for Americans involved as investors feel uncertain and people try to protect themselves financially, Schweitzer said.
“In fact, you might argue that Trump’s finally got the 51st state that he wanted: the state of uncertainty,” he said.
Should more tariffs go into effect, American consumers in Pullman and beyond will likely see price increases, as they will be faced with paying the tariffs themselves and increased prices for produce items like avocados, bananas and cherry tomatoes, Clarke said.
Oil and electricity may also come into question as the U.S. trades electricity with Canada and refines crude oil from Mexico before it is exchanged between the two, demonstrating that the processes are highly intricate and interdependent, Schweitzer said.
Whitman County, as one of the biggest wheat producers in the country, will very likely be hurt by any retaliation from tariffs on significant U.S. wheat importers like Japan, Clarke said.
The majority of the responses to the open letter have been supportive, especially as it becomes clear that when the importers of the stuff have to pay the tariff, the immediate hit is right here, Schweitzer said. Members of the public are encouraged to reach out to their elected officials.
“Pretending that Americans aren’t paying that tax is no way to do taxation, and leaving you and me out of it by executive order is taxation without representation,” he said. “I’m not recommending we start throwing tea bags or avocados into the Snake River, but we do need to be speaking to our elected officials and everyone I’ve talked to from both parties tends to get it.”
As events unfold, Schweitzer said he hopes democratic processes and discourse ease the effects of these policies.
“When we use the system that we’ve been blessed with 250 years ago, everything’s going to eventually turn out okay. We’re gonna go through a rough cycle here for a while and, if we all work hard on it right now and do it in a respectful, constructive, positive way, it’ll be a short while,” he said.
