When tax laws are revised and tariff policies are adjusted, good intentions are not always met with satisfying results. Businesses are generally very good at making the modifications and adaptations necessary to deal with law and policy changes over the long haul. However, on a near term basis, the changes create almost as many losers as they do winners.  

Tariff wars are a long term strategy. Their ultimate goal is to level the playing field. However, organizations who have implemented strategic modifications to minimize offshore advantages are caught in the middle.  Organizations who get the desired protection from increased tariffs often seek to recover previous monetary losses through price increases at the expense of their downstream suppliers and some upstream customers.

Steel Tariff Impacts Local Manufacturers

Paul Czachor, President of American Keg in Pottstown, was on several news channels recently discussing the fallout his organization is trying to overcome from the increased tariffs on stainless steel.  The problem he faces is twofold.  The raw material price increase from the steel makers has to be passed through directly to his customers. Further, the offshore competition has aggressively attacked the tariff by lowing their prices. The remedies for this type of collateral damage are hard to come by and require some outside of the box thinking.

In the winner’s circle, Carpenter Technologies in Berks County has taken advantage of the new tax breaks by committing $100 million dollars over the next several years to a new manufacturing process and product line enhancement. While a few organizations have been beneficiaries of immediate tax gains and are currently sharing them with employees, many others are forced to wait while trying to measure the impact of lost tax shelters.

In order to address some of these issues, the Alliance will be holding an event titled, “Taxes and Tariffs”, at a member company in Limerick, Pa, during the month of May.  While much of the tax and tariff change impact is still unknown, organizations have already begun addressing the fallout.  Please join us at this event where experts in the field and local business leaders will be sharing their strategies to address the issues and remedies for them.