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The Threat of Biden's Tax Policy on My Family's Can Company
Independent Can, my family's can company, is a testament to resilience and perseverance. It has weathered the storms of the Great Depression, the Great Recession, two World Wars, and the policies of 16 different presidential administrations. However, its survival is now threatened by a proposal from an Ohio steel conglomerate that could upend our business and wreak havoc on the U.S. manufacturing sector.
The steel giant, Cleveland-Cliffs, has petitioned the U.S. International Trade Commission to impose tariffs of up to nearly 300% on imported tinplate steel. Tinplate is a crucial raw material for can manufacturing, used extensively in producing a wide array of goods, from soup cans to paint cans and bug sprays. My company, Independent Can, specializes in creating custom and decorative products, bringing joy to customers with our popcorn and cookie tins during Christmas and offering convenience with our coffee bean cans in cafes.
Cleveland-Cliffs argues that eight countries, including U.S. allies like Canada, Germany, the Netherlands, South Korea, Taiwan, Turkey, and Great Britain, along with China, are flooding the U.S. market with low-cost tinplate steel. They claim this poses a threat to national security. However, this argument overlooks the fact that domestic steel manufacturers can only supply about half of the tinplate needed by U.S. can manufacturers. To meet the demand for our affordable, high-quality decorative tins, my company and others like us rely on imports from these eight countries.
By seeking the imposition of these exorbitant tariffs, Cleveland-Cliffs is essentially seeking federal protection against foreign competition. This move places the burden on smaller manufacturing businesses like mine. If these tariffs are implemented, we will be compelled to increase our product prices due to the higher input costs. Consequently, our customers may turn to cheaper alternatives from countries like China and Mexico, thereby hurting our businesses.
It's worth noting that Cleveland-Cliffs is not seeking this protection due to financial constraints. In fact, they have seen a significant increase in their revenue in recent years and expect 2023 to be their best shipment year ever. Their call for protectionism is simply a strategy to boost their income, which may benefit a few steelmakers but will severely impact businesses like mine.
Trade Partnership Worldwide, in a recent study, projected that the proposed tariffs would lead to a nearly 20% decline in U.S. can production three years post-implementation. This could force us to cut our manufacturing jobs by nearly 30%, and U.S. food manufacturers may have to eliminate close to 40,000 jobs. On the other hand, only 66 new jobs are expected to result from the tariffs. The trade-off does not add up.
As we navigate this challenging situation, I echo the words of the late President Ronald Reagan, who warned against declaring a trade war against our allies, which would only serve to weaken our economy and national security. Cleveland-Cliffs' proposal is precisely what Reagan warned against. Therefore, I call upon the Department of Commerce and the International Trade Commission to consider the full impact of these proposed tariffs on American businesses, jobs, and consumers before making a decision. The survival of businesses like mine and the well-being of thousands of workers hang in the balance.
Implications for New Businesses and LLCs
For new businesses and LLCs, particularly those within the manufacturing sector, the proposed tariffs on imported tinplate steel by Cleveland-Cliffs could significantly influence their growth and survival chances. The outcome of this proposal has far-reaching implications, and it's imperative we analyze the potential impact.
Increased Production Costs and Market Competitiveness
The proposed tariffs could lead to a price hike in raw materials, thereby increasing production costs for new businesses that rely on imported tinplate steel. This is a concern for business owners grappling with the challenges of setting up a new venture. Higher production costs could result in increased product prices, potentially making their goods less competitive in the market.
Restrictions on Market Choice
The possibility of tariffs might restrict the market choice for new businesses, particularly those dependent on raw materials like tinplate steel. The argument that domestic steel manufacturers could supply the needed materials overlooks the reality that their capacity is only half of what manufacturers need. This constraint can limit a new business's ability to scale operations and meet customer demand.
Dilemma of Foreign Competition and Federal Protection
A new business, regardless of whether an LLC or a larger entity, should be prepared for foreign competition. However, the proposed tariffs appear to provide federal protection to a select group at the expense of others. This kind of protectionism can create long-term market imbalances, which could hinder growth opportunities for new businesses.
Job Creations vs. Job Losses
The promise of creating 66 new jobs by implementing tariffs seems diminutive when compared to potential job losses. According to Trade Partnership Worldwide, the introduction of these tariffs could force U.S. can producers to cut jobs by nearly 30% and U.S. food manufacturers to eliminate close to 40,000 jobs. This potential job market turmoil may create a challenging environment for new businesses looking to hire.
Conclusion: A Call for Judicious Decision-Making
In conclusion, the proposal by Cleveland-Cliffs to impose tariffs on imported tinplate steel is a critical concern for new businesses and established companies alike. The Department of Commerce and the International Trade Commission must deliberate judiciously on this matter, considering the broader impact on American businesses, jobs, and consumers. The decisions made today will shape the business landscape of tomorrow, significantly impacting new businesses and LLCs striving to carve their niche in the industry.
Original Article First Published at: https://www.foxbusiness.com/economy/bidens-new-tax-could-squash-my-familys-can-company
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