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Tariffs impacting West Michigan economy with hit to local industrial businesses

Posted at 5:29 PM, Aug 09, 2018
and last updated 2018-08-09 17:29:19-04

KENT COUNTY, Mich. -- As the trade war continues, U.S. imposed tariffs are affecting the local economy, from higher material prices to layoffs at smaller business.

"This is the first hit that we have taken in 18 months, part of it relates to this fear of the tariff wars that we have out there," said Brian Long, Director of Supply Management Research with Grand Valley State University’s Seidman College of Business.

Based off a monthly survey done for the last 40 years of 63 West Michigan industrial businesses, Long says there was recently a sharp drop in new business orders because of what's becoming a "wait and see" attitude with U.S. tariffs.

"The market of course is very nervous right now: not only just for steel and aluminum, but for a whole host of other commodities that, as we get into this tit-for-tat, back-and-forth on the trade war, we have a problem that even commodities that we hadn’t thought of, such as electronic components," said Long, addressing tariffs on imported steel, aluminum and Chinese products.

While Long says local industrial buyers are worried, most consumers won’t feel the hit of the ongoing trade war. Yet consumers are feeling a separate impact: booming construction in West Michigan, causing a bit of a shortage in some products like structural steel, and continued expensive housing.

"There’s so many people who are building right now that our steel kind of got held up in that," said John Kunnen, chairman of the building completion team withTrinity Baptist Church in Grand Rapids.

Kunnen is leading a $1.5 million expansion at Trinity Baptist Church. He says their steel order is delayed by at least four weeks, and the prices of raw materials were higher compared to their last major project in 2012. Local contractors are also busy.

"We’ve had several of the subcontractors say that they’re just too busy, they can’t quote on it, they don’t have time to do it," said Kunnen. "But all in all, I think we’ve had a good competition."

Meanwhile, Long says the tariffs' effects on local economies should be watched closely.

"It's just been this last month that we’ve seen one of the sharpest drops in new orders, new business coming into the firms, that we have seen, and that is all based on consternation about where this tariff war is going," he said.