Utah Metalworking Company Cancels Expansion Plans Because Tariffs
The unseen costs of the Trump administration's bellicose trade policy matter too.
Business had been good at Jack's Ornamental Iron. So good, in fact, that co-owners Greg Schow and Tina Pardue were planning to expand into a larger workspace and hire 25 percent more employees.
But those plans have been canceled, they told a local Salt Lake City television station this week, because President Donald Trump's tariffs have imposed huge new costs on the metalworking company's supplies of steel and aluminum. Schow says the business purchases roughly $1 million worth of steel every year, so the 25 percent import tax on imported steel means Jack's Ornamental Iron will face about $200,000 in new overhead costs.
Jack's Ornamental Iron does a wide range of metalworking, buying raw steel and turning it into everything from boat propellers to railings and metal staircases for apartment buildings. The sudden increase in the price of steel has created big problems for Jack's because the company has several contracts that were signed before the tariffs were announced.
"So once they give us that contract at the very beginning, we're locked in and we can't change your pricing," Pardue told KUTV. "On our current jobs we have right now, we're just having to eat it."
That's why the expansion and new hiring are on hold.
Sen. Orrin Hatch (R-Utah) highlighted the Salt Lake City company's plight at Wednesday's hearing of the Senate Finance Committee, where a number of senators sharply criticized Commerce Secretary Wilbur Ross for the administration's tariff policies.
"These companies are small, Mr. Secretary, but they are important," Hatch said, referring to Jack's Ornamental Iron and another Utah-based metalworking firm. "They are important sources of jobs in our communities, and they are particularly vulnerable to the consequences of tariffs."
Even after being mentioned in a Senate hearing, it's unlikely that stories about businesses like Jack's Ornamental Iron will get the sort of coverage that, for example, Harley-Davidson received this week when the iconic American motorcycle manufacturer announced that it would be moving some production jobs overseas to avoid tariffs. It's unlikely that Jack's Ornamental Iron will get trashed by the president on Twitter—as Harley-Davidson did—for canceling plans to hire more workers.
The decisions made by each of these businesses illustrate the consequences of the White House's bellicose trade policy. Steel prices have spiked since the tariffs were announced (just like how prices for lumber and washing machines spiked after earlier Trump tariffs went into effect), increasing production costs for myriad American businesses while leaving those same businesses at a competitive disadvantage against foreign competitors. Ultimately, consumers pay the price.
But what's happening at Jack's Ornamental Iron also speaks to the difficulty of assessing the real economic impact of the tariffs. When companies lay off workers as a way to offset the higher costs of their materials, it's possible to count those job losses. The same is true when a company like Harley-Davidson says it is going to move some jobs overseas to avoid the tariffs. Schow's and Pardue's decision to cancel plans to hire more workers won't get included in those counts, but it's still a loss—both for the economy as a whole and for the individuals who would have gotten those jobs that now won't exist.
There are plenty of seen, measurable consequences for tariffs. The unseen costs matter too.