Trade War's Tariffs Costing Minnesota-Owned Manufacturers Profits, Business
ST. PAUL (WCCO) -- Seventy years ago, Dan Digre's parents started Misco. The St. Paul company is a manufacturer of high quality speakers. Its products are sold worldwide to go into everything from submarines to gaming devices.
But while Misco's 70 employees assemble the speakers in St. Paul, the component parts used come largely from China. When the trade war's list three tariffs took effect in the fall of 2018, Digre's business took a huge hit.
Ever since, Digre receives weekly invoices from the government detailing thousands of dollars in tariffs owed.
"We're paying a 25 percent tariff now on all parts we bring in from China," Digre said.
Frustration and concern over the ongoing trade dispute prompted Misco to team up with a Bloomington bike parts company and several Minnesota farmers. On his factory floor they held an hour long discussion about the trade war's impacts on each of their businesses.
Soybean grower and President of the Minnesota Farm Bureau, Kevin Paap, said, "The consequence we're most concerned in Agriculture with is that once you lose a market it's really hard to get it back."
Soybean and pork producers are losing large chunks of business to South American growers. Meantime, tariffs on steel and aluminum bike parts are taking a huge bite from Quality Bicycle's bottom line.
"The money we have left at the end of the year to invest and pay profit sharing, 40 percent of that is now represented in tariffs," general counsel Matt Moore said.
According to the advocacy group, Tariffs Hurt the Heartland, Minnesota businesses have paid an extra $704 million in import taxes on products subject to the Trump administration tariffs. That includes $72 million just in September.
But the speakers made it clear this is not only a strain measured in lost dollars, but also in greater uncertainty for all their businesses.
"At the end of the day we haven't innovated, we haven't created anything new. All we've done is moved our supply chain from China to some other country," Digre said.
What his speaker company will save on tariffs, by securing parts elsewhere, it will lose valuable time to the competition.