Tariffs Take Toll on Farm Equipment Manufacturers
Their iconic blue-colored planters and grain cars are recognizable on many farms across the United States. They are also easily spotted in large displays, some stacked one on top of the other, in front of Kinze’s manufacturing hub along Interstate 80, where, inside buildings sprawling across a campus situated among Iowa’s corn and soybeans fields, the company’s employees work with one key component.
“Steel is the lifeblood of Kinze,” says Richard Dix, a company senior director. “We’re a factory that’s essentially a weld house. We cut, burn, form, shape, cut, paint steel.”
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Steel now costs more, the result of a 25 percent tariff on the material imported from most countries, including China.
“When there is a tariff on steel it cuts rights to the core of our fundamental product construction,” says Dix.
In March of 2018, President Donald Trump imposed tariffs on aluminum and steel, with the goal of boosting U.S. production and related employment.
While there has been a modest benefit to the domestic steel industry, Dix says increased costs are negatively impacting smaller manufacturing companies like Kinze.
“We see the bills that come in from our suppliers are higher based on those tariffs,” Dix explains. “Not just in steel but also in a lot of the electronics, rubber commodities and other agricultural parts we buy from China as well. Those tariffs take their effect on our cost structure, on the profitability for the family, through our employees, and now to our dealers and on to our customers.”
Those customers are mostly U.S. farmers who use some of Kinze’s products to put soybean and corn seeds into the ground. Soybean exports in particular are now subject to retaliatory tariffs imposed by the Chinese, one of the biggest export markets for U.S. farmers, which has sunk commodity prices and contributed to another year of overall declining income for U.S. farmers.
That means many are less likely to purchase the products Kinze makes.
“The market is substantially down,” says Dix. “The farmers don’t have that level of security they need to go out into the dealerships and buy that equipment. We get a one-two punch. We pay more for the product that comes into us and therefore on to the customer, and then we have a reciprocal situation where we can’t export what was advantageous to us.”
These are some of the concerns Dix explained to Iowa Republican Senator Joni Ernst, who participated in a roundtable discussion at Kinze along with farmers and others in Iowa impacted by tariffs. It was part of a “Tariffs Hurt the Heartland” event hosted by Kinze, and organized by the group Americans for Free Trade along with the Association of Equipment Manufacturers.
Ernst says the personal stories she gathers from these meetings go a long way in helping President Donald Trump understand the impact on her constituents.
“He has a very different negotiating style,” she told VOA. “He wants to start with the worst possible scenario, and negotiate his way to a good and fair trade deal, but again sharing those stories is very important and yes it does have an impact. I think the president does listen.”
Ernst says she is encouraged by news from the Trump administration on developments in negotiations that lead her to believe the trade dispute with China, and the related tariffs, could end soon.
“When I last spoke to [U.S. Trade Representative] Robert Lighthizer, he had indicated that the deal with China is largely done, it’s just figuring out the enforcement mechanism, and that is what the United States and China are really bartering over right now.”
But Kinze’s Richard Dix says one year under tariffs has already taken a toll on the company’s operations.
“We’re not really that big, so we can say that this impact has been a seven-figure impact for us in the last year, and that’s a substantial amount of money.”
It’s an amount that Dix says, so far, hasn’t been passed on to Kinze’s customers, or the employees.
“We have not actually had any direct layoffs that are attributable to this tariff situation, but we’re all tightening our belts.”