Burning bridges or blowing smoke? Kane County business owners assess impact of tariff plans

Kane County business owners have different expectations for how tariffs promised by President Donald Trump will affect their industries. Some have concerns over business relationships with neighboring countries, while others expect the aggressive trade stance to revitalize American production lines in their industry.

St. Charles automotive repair shop owner Minor Mobley is not expecting a negative impact on his business from the tariffs, and is in full support of the President’s plans to ramp up taxing on imports.

“I believe in the tariffs,” Mobley said. “I believe in making foreign countries pay their dues, when it comes to the United States.”

In January, Trump announced plans for 25% tariffs on goods imported from Canada and Mexico, and 10% tariffs on Chinese goods and Canadian energy.

Mobley said for his business, at worst, he expects there could be some delays on foreign parts, but nothing worse than in recent memory.

On the other hand, Kane County manufacturing company CEO Jim Sauber said while tariffs on some materials and products can be avoided by supplementing and substituting with other supplies, in his industry, there is no substitute for steel or aluminum.

Sauber said the tariffs could potentially affect several aspects of his business, from costs of materials to a decrease in demand from Canadian customers, and he expects the tariffs on steel and aluminum to have the largest affect on his business.

“I think what we recently did to Canada and Mexico weakens our joint interests and our friendship... I don’t think the feelings that the Canadian people have for us are as warm as they were three or four months ago.”

—  Jim Sauber, CEO of Sauber Mfg. Co.

Sauber said Sauber Manufacturing used over 1.2 million pounds of ferrous steel last year, as well as considerable amounts of other types of steel and aluminum, all of which could be subject to tariffs this year. He added that there are many types of steel used in the automotive and aerospace industries that are only made in other countries.

Sauber Manufacturing produces, manufactures and distributes products for the utility industry, including trailers, parts, equipment and utility vehicles. It was founded in 1968 in Virgil and currently has 86 employees.

The tariffs were originally expected to go into effect on Feb. 4, but Trump delayed their implementation for 30 days, to March 12, shortly after announcing the plan.

At a Feb. 13 news conference, however, Trump announced and signed a new plan to rollout “reciprocal tariffs” on trade partners across the globe, increasing our tariffs on every country to match the amount each has in place.

For industries like the automotive industry, whose manufacturing and assembly processes have long been interwoven with Canadian and Mexican companies, the tariffs could effect all kinds of related businesses from industry giants to local retailers and service providers.

“If it has to get worse before it gets better, I understand that,” Mobley said. “Is it something that I want? No, but the reality of it is; our country is a mess and so we have to hit the reset button, and the only way to do that is to make sure that countries around the world are paying their fair shares to the American people.”

Minor said he believes what would hurt the automotive industry is if American manufacturers are not producing parts, and he hopes the tariffs will spur an increase in production of American-made automobiles and parts.

“Once you start getting automobile companies building and making things in the U.S., then there should be no shortage on anything,” Mobley said. “I think people are blowing a lot of smoke, to stir-up and get people worried. To be honest with you, nobody knows what’s going to happen.”

Sauber said he expects his company to feel the effects most when their products are carried to market with a heftier price tag. He said even if all their competitors raised their prices as well, there is a good chance that demand will decrease across the industry, as higher prices will mean a reduction to customers' return on investment.

“I think this is going to have a significant impact on cost and could hurt demand for the equipment because of the higher price, and I think that’s where the pain is,” Sauber said.

Sauber said Canada is a significant market for the products made at Sauber Manufacturing., so the rocky relationships between Canada and U.S. companies that the tariffs could foster are also a major concern.

“I think what we recently did to Canada and Mexico weakens our joint interests and our friendship.” Sauber said. “Even with the initial tariffs suspended for 30 days, I don’t think the feelings that the Canadian people have for us are as warm as they were three or four months ago.”

Sauber said there is not much that companies like his can do to brace for the tariffs, as a majority of their project plans and contracts for the year are already in place and can’t be altered.

“The tariffs provide cover for the industry here in America to elevate prices,” Sauber said. “Even so, [Sauber Manufacturing] and others are not going to be in a position to just pass these costs on.”

“Uncertainty makes it difficult for companies to plan,” Sauber said. “The fact that there’s no preparation time in the marketplace not only creates shock, but makes it difficult for ground companies like Sauber Manufacturing to make capital investments the way we have been, because of the uncertainty.”

Sauber said while impacts to cost and demand are the short term effects of the tariffs, the long term effects are harder to predict. He said if they do face a lasting reduction in demand, it could eventually impact the amount of people they employ, but that is not something he expects.

St. Charles pre-owned car dealership owner Brian Rudowicz expects his business to feel secondary effects of the tariffs, if any.

Rudowicz opened St. Charles Motorcars in 2013. The pre-owned dealership has an emphasis on sports cars, and Rudowicz said imported car sales account for at least half of their business.

Because St. Charles Motorcars buys locally and doesn’t purchase new vehicles from manufacturers, Rudowicz doesn’t expect to feel a direct affect of the tariffs, but acknowledged any affect on the new car industry would eventually trickle down. The tariffs he expects to have the biggest impact on the auto industry are those on steel and aluminum.

“I think it’s primarily going to affect the new car business first, and then if it lasts, it’s going to trickle down to the used car business,” Rudowicz said. “Depending on how long it lasts, you’ll see less rebates, less incentivized finance rates and a shortage of inventory.”

Rudowicz said if the tariffs impact the new car business and create a shortage, that would in turn decrease the used car inventory, increasing demand and sticker prices. He said he expects to see a similar effect to that of the chip shortage that slowed automobile production lines a few years ago, leading to car owners holding onto their vehicles longer and sending used car prices soaring.

“As a business owner, there’s really nothing we can do to react to this,” Rudowicz said. “You can’t go out and buy a bunch of inventory and hope that things change or don’t change. You just kind of have to wait and see what happens and hope for the best.“