Industry Reacts to Steel and Aluminum Tariff Proposal
In early March, President Trump imposed additional tariffs on steel and aluminum. The Air-Conditioning, Heating, and Refrigeration Institute (AHRI), which represents manufacturers of heating, air conditioning, commercial refrigeration, and water heating products and equipment, spoke out against the tariffs in letters to the President, as well as to Commerce Secretary Ross and U.S. Trade Representative Lighthizer. AHRI does not support additional tariffs on steel and aluminum due to their impact on manufacturers and consumers.
“As major users of steel and aluminum, we have been proactive in explaining to the administration that the HVACR and water heating industry would be negatively impacted by an increase in tariffs, as would the consumers that rely on the products we manufacture,” said AHRI President & CEO Stephen Yurek. “While we have been pleased with the Trump Administration’s enthusiastic support for manufacturing, we believe this step to be injurious, rather than helpful, to our efforts to increase American manufacturing and create jobs.”
Critical to AHRI’s position on the tariffs are the many jobs supported by the HVACR and water heating industry. Late last year, AHRI published a report finding that in 2015, the most recent year figures are available, the industry shipped $42 billion worth of products and equipment to consumers in the United States. Although manufacturers alone account for about 125,000 U.S. jobs, together with upstream suppliers and downstream distributors, that number increases to 883,100 U.S. jobs. In addition to these jobs, there are approximately 408,000 jobs associated with installation, construction, and maintenance related to HVACR which combine to bring the total number of jobs, including contractors, to nearly 1.3 million. The manufacturer jobs alone generated $15.5 billion of value added to the U.S. economy on $10.1 billion of labor compensation.
While many argue that the tariffs would focus spending on American-made steel and aluminum, AHRI’s concerns lie in the fact that the tariffs will raise the price of these commodities, as well as put pressure on American manufacturers that may be unable to rapidly increase supply, thus raising prices on both domestic and imported steel and aluminum. HVACR manufacturers rely on these products to build their own, and increased costs would force manufacturers to raise prices. As a result, demand for HVACR products would fall, and if such a situation were to continue for any length of time, U.S. employment could be impacted. AHRI is a strong supporter of American-made steel and aluminum—in fact, our member companies buy a very significant amount of both. However, the industry supports more than one million jobs, and AHRI is concerned these jobs could be impacted if costs increase for steel and aluminum.
At the same time, AHRI has urged action on the part of the government to advance international standards as a way to strengthen trade. During a March 6 Standards Summit in Washington, D.C, sponsored by the Department of Commerce, International Trade Administration Scott Tew, who chairs AHRI’s International Committee and is executive director of the Center for Energy Efficiency & Sustainability at Ingersoll Rand, outlined the industry’s concern regarding several standards-related trade issues. The HVACR and water heating industry considers standards to be integral to the industry’s global trade, competitiveness, and technology transfer, but it is critical they are not used as trade barriers. AHRI and the industry are committed to promoting AHRI’s international standards, which can be referenced, along with AHRI Certified products, by foreign governments as a way to meet minimum efficiency performance standards. Tew said that the industry will focus its cooperation with federal and state trade-related branches of government to ensure that U.S. trade negotiators have the information required to ensure trade treaties reference AHRI standards.
Fortunately, the proclamations included a clause exempting Canada and Mexico, pending the result of NAFTA negotiations, and offer flexibility for other countries to engage with the Administration on alternative tariff options. The Secretary of Commerce is authorized to provide relief for any steel or aluminum article “determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality,” and based on “specific national security considerations,” according to the proclamations. The Department will publish a proposed process for meeting this goal in the Federal Register, after which AHRI and other interested parties will comment.