Trump's tariffs proposal leaves U.S. keg factory owner 'horrified'
Workers at the American Keg Company in Pottstown, Pennsylvania, believe Donald Trump's proposed tariffs on steel and aluminum could save their jobs. In reality, the opposite is true.
It's an example of the power of the U.S. president's rhetoric in a region where people cling to hope of a revitalized manufacturing sector, without always grasping the intricate and often confusing implications of global trade policy.
Last week, Trump said he would apply a new tariff of 25 per cent on imports of steel and 10 per cent on aluminum. Several countries threatened retaliatory measures, including Canada, though it's unclear whether the tariffs would apply to this country.
Zerick Hudson, 28, has worked at the American Keg Company since 2016. He has three sons, the youngest just two months old. He knows the reason his employer is struggling: the kegs Hudson helps assemble are made from American steel. That already makes them more expensive than finished kegs imported from China.
He reasons the tariffs would equalize things. "It kind of gives me hope," he said. "It would be a better outcome for us."
Glen McCauley agrees. The 58-year-old has been working at the American Keg Company for nine months after being unemployed for two years.
"I think it's a great idea," he said. "I hope it makes us more competitive in the world market."
Company owner 'horrified'
The workers aren't alone in getting it wrong: shortly after the president announced his plan, Republican congressman Ryan Costello told National Public Radio he thought tariffs would be good for the American Keg Company, which is in his district.
The company's owner, Scott Bentley, says he had to correct the congressman, who he describes as a friend.
Bentley says he's "horrified" by the proposal, adding it could raise the cost of doing business to the point where it's unsustainable.
That's because the tariffs would further drive up his cost to buy domestic steel, while Chinese kegs, which would not be covered by the tariff because they are already manufactured, would stay cheap.
"When a Chinese keg delivered to America costs only a little more than what we pay for just the steel, there really is no point in trying to compete on that basis," says Bentley.
He's already losing $50,000-$100,000 a month. He says 2018 will be a make-or-break year for the business.
Heavy jobs losses forecast
The American Keg Company has just 20 employees, so it would be a relatively small casualty in any fallout from from the tariffs.
But it's part of a much larger network of steel-using companies — makers of cars and trucks, of construction components, of military armoury — that stand to lose money and jobs should the tariffs be implemented, as the costs of making their products goes up and employers shed workers to offset those costs.
In a CNN report Wednesday, Mark Zandi, chief U.S. economist at Moody's Analytics, estimated that job losses because of the tariffs could range from 100,000 to 150,000.
A report published Monday by D.C.-based consulting firm The Trade Partnership suggests that five jobs would be lost for every job gained.
Bentley expects at least some of his workers would be among those on the losing end. "I worry about the people here," he says, his eyes filling with tears.
Bentley — who runs other businesses in the area — bought the American Keg Company in 2016. He says he didn't expect to make much of a profit, but, given the growing craft beer industry and the expectation brewers would pay at least a little more for a domestic product, breaking even seemed possible.
The only way that can happen now, he says, is if the U.S. government broadens the proposed tariffs to include imports of finished kegs. But that's a tough case to make for a small company without lobbyists or lawyers.
Bentley says his employees might not understand all the implications of Trump's proposal. He fears they'll come to understand it the hard way.