Canton Repository

November 2, 2003

Area companies don’t fear threat of tariffs

By PAUL M. KRAWZAK
Copley Washington correspondent

WASHINGTON — With one possible exception, major area employers appear poised to avoid serious damage if the European Union goes through with threats to slap $2.2 billion in retaliatory tariffs on American exports.

Unless President Bush puts an early end to domestic tariffs protecting the steel industry, the Europeans threaten to impose similar tariffs targeting American exports of citrus, vegetables, apparel, farm machinery and other products. Such a punitive move could indirectly have adverse consequences for the Hoover Co.

While the European tariffs could do serious damage in parts of the Southeast, West and Midwest, area employers say most of the goods they sell abroad are not on the list of targeted items.

Hoover in North Canton would not be directly affected, because the tariffs would not apply to the vacuum cleaners the company makes. But Hoover’s parent is Maytag Corp., a major appliance manufacturer, and the Europeans are targeting stoves and ranges with tariffs that would add 30 percent to the cost of exporting those items.

No one from Maytag was willing to discuss the possible impact of the tariffs.

Maytag spokesman Kevin Waetke referred questions to the Emergency Committee for American Trade, a Washington-based trade group that is urging Bush to end the steel tariffs to prevent the Europeans from retaliating.

Calman Cohen, president of ECAT, said the tariffs would hurt Maytag, but he did not provide details.

Hoover is already struggling to cut production costs to avoid the threatened closing of its North Canton operations. A blow to Maytag’s exports could make matters more difficult for Hoover.

Diebold in North Canton, an exporter of automatic teller machines, would not suffer because ATM exports are exempt.

Timken Co. in Canton exports bearings, but they were removed from an earlier retaliation list, spokesman Jason Saragian said. He said he did not know why they were removed.

Gradall Corp., a maker of telescopic-boom earth-moving equipment in New Philadelphia, does little exporting, spokeswoman Juno Rowland said.

The punitive tariffs also would apply to some American steel exports, but few area steel makers sell in Europe.

Timken’s steel exports are minimal, Saragian said.

Republic Engineered Products in Fairlawn exports some steel but it goes to Canada and Mexico, which are exempt from the steel tariffs and are not threatening retaliation.

J&L Specialty Steel in Louisville, which is owned by a European steel giant, does little exporting, spokesman Jim Leonard said.

A key date in the emerging drama is Nov. 10, when an international appellate panel is expected to deliver a final ruling on the steel tariffs, that the World Trade Organization found to be a violation of international trade law.

The United States appealed the WTO decision.

Most observers expect the panel to back the WTO.

The Europeans have threatened to impose their sanctions in mid-December — a threat that Illinois-based Caterpillar takes seriously.

“We’re convinced that they will” impose the tariffs, said William C. Lane, a lobbyist for the manufacturer of earth-moving equipment and engines. Although a major exporter, Caterpillar has not been targeted by the Europeans.

Struggling with rising production costs due to the administration’s decision to impose the higher duties, steel using manufacturers are pressing Bush to lift the tariffs before their scheduled demise in 2005. Exporters fearful of a trade war have joined them.

Meanwhile, U.S. steel makers are trumpeting the tariffs’ role in spurring consolidation of the industry. Together with congressional allies such as Reps. Ralph Regula, R-Bethlehem Township, and Bob Ney, R-St. Clairsville, they are urging Bush to keep them in place.

Bush has yet to tip his hand, but, if he does bring an early end to the tariffs, their removal would have little impact on Timken while creating further problems for struggling Republic, the companies said.

Timken has supported the steel tariffs, but ending them would cause little harm because most of the specialty steel produced by the company is not covered by tariffs anyway.

“It doesn’t have a major impact on our business,” Saragian said.

The tariffs add 24 percent to the cost of importing bar steel, which gives a price advantage to domestic producers. Bar steel makes up just 30 percent of Timken’s steel line.

Republic, a producer of bar steel, supports the tariffs and would suffer if they were ended, officials said.

“We’re concerned that we would see a return to increased levels of (imports) coming in,” said Ted Thielens, vice president of marketing.

Without the tariffs, steel prices would fall and imports would increase, Thielens fears.

J&L does not have a position on the tariffs, and the stainless steel sheet it produces is not covered by the duties, a spokesman said.

Many steel using companies have complained that the tariffs have rendered their products uncompetitive.

As a steel user, Diebold could have been hurt by rising steel prices, but the company worked out a deal with North Carolina-based Nucor Steel to produce the plate it previously bought from France, said Greg Warder, global procurement group manager.

“We’ve actually saved some money,” Warder said.

Ohio trade officials and Gov. Bob Taft’s office said they had been unable to determine whether state exports were threatened by the European tariffs.

“It’s certainly something we are looking at and certainly something that Gov. Taft is concerned about,” Taft spokesman Orest Holubec said.