enLIGHTenment – The Lighting Industry Trade Publication

Lighting Industry Reacts to Tariffs

By Hannah Rachel Carroll

President Donald Trump’s threats of steep tariffs on steel and aluminum imports are now a reality.

White House officials say placing a 25-percent levy on steel and 10-percent charge on aluminum is a simple way to restore American industry to former glory. Many American politicians and businesses, as well as foreign nations, however, denounce the tariffs. Now there’s talk of an impending trade war.

Adam Pollock, President of Iowa-based lighting manufacturer Fire Farm Lighting, understands President Trump’s intentions, but believes the tariffs are positioned to hurt more U.S. workers than help them.

“Trump hopes that if metals from other countries become more expensive due to the new taxes, more businesses will turn to American steel and aluminum makers to fill demand. Theoretically, that would breathe new life into industries that have been struggling for years,” Pollock explains. “I get it — the goal is to protect domestic industry. But will these tariffs actually help American manufacturers? Not really.”

For decades, Pollock has been a strong advocate for U.S. manufacturing. After establishing Fire Farm Lighting in Oakland, Calif. in 1991, he relocated to Elkader, Iowa to keep the entire operation domestic.

“We’re already seeing a rise in material costs and a steady increase in interest rates with no change in overseas competition,” he adds. “The tariffs are undoubtedly going to make things harder. What concerns me the most, however, are long-term effects. I am worried about seeing our economy fall back into Recession.”

U.S. employment rate and monthly changes from 2009–2016.

 

Pollock isn’t the only one concerned.

“An imposition of a tariff like this will do nothing other than distort trade, and ultimately … will lead to a loss of jobs,” Steven Ciobo, Australia’s trade minister said in a statement last week, adding that Australia’s share of the U.S. steel and aluminum markets is worth around $550 million.

Other countries are angry about the mechanism the U.S. is using to pass the tariffs.

According to an article released by CNN Money, President Trump is implementing Section 232 of the Trade Expansion Act, a little-known trade law from 1962, to claim that steel and aluminum imports pose a threat to national security. 

“It is entirely inappropriate to view any trade with Canada as a national security threat to the United States,” Canadian Foreign Minister Chrystia Freeland said in a statement.

Meanwhile, European Commission President Jean-Claude Juncker said, “We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk.”

The European Union has said it’s ready to impose tariffs on Harley-Davidson (HOG) motorcycles, bourbon whiskey, Levi’s jeans, peanut butter, and cranberries in response.

American businesses that consume large quantities of steel and aluminum have also voiced concern. The tariffs would raise the cost of raw materials for automakers like Ford (F) and General Motors (GM), as well as Boeing (BA) and Anheuser-Busch (BUD).

The American Lighting Association (ALA) is also against the tariffs. 

“ALA opposes any action that could adversely affect the market for residential lighting products,” says Michael Weems, ALA’s VP/Government Engagement. “The greatest threat of harm to the industry could come about because of the fallout on products coming from overseas.”

The ALA has a history of working to oppose or reduce tariffs. For years, the organization has tried to eliminate the 4.7 ad valorem duty collected on imported ceiling fans.

Others in the lighting industry, however, believe the new taxes will have little effect.

“I expect somewhere around three to five percent of a price increase for consumers, specifically regarding to the home furnishings category,” says Brad Smith, CEO of Pa.-based manufacturer ELK Group International. The company, founded in 1983, distributes more than 9,000 products under ELK Lighting, Landmark Lighting, Alico, Nulco, Artistic, Cornerstone, Dimond Lighting, Dimond Home, ELK Hospitality, GuildMaster, Lamp Works, Mirror Masters, Stein World, Sterling, Pomeroy, and Thomas brands.

A former investor and self-proclaimed Wall Street junkie, Smith has been closely monitoring news outlets for updates regarding the tariffs.

“I’m following, but not with a lot of concern. The stock market is doing well, inflation is down, steel is generally inexpensive to begin with,” Smith explains. “The industry has room to pass that tariff along. No one likes to see prices increase, but we’re all in this together. So, if we’re all getting hit, then we should all subsidize. A tariff like this has to potential to help level the playing field.”





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