[M]ORRISVILLE — Typically it takes two or three weeks for Marc Cote to hear back on whether his company won a bid for a contract to work on a bridge somewhere in the state.
These days, steel prices are fluctuating so much — especially after President Donald Trump’s announcement that the U.S. would impose tariffs on foreign steel — that the process needs to move faster.
The company recently submitted a bid for a job on a Friday, Cote said. The steel supplier told them that to lock in the material price, they would need to know whether it was a go by Monday.
“Now it’s pushing the owners to get us that answer, you know, basically within 48 hours of the bid opening,” Cote said.
General contractors are feeling the pinch more than most. They are joined by Vermont businesses in industries from aviation to beer and even apples who are bracing for some impact as U.S. trade relationships shift. Some industries are already seeing pressures from fluctuating raw material prices, others are anticipating market changes down the line.
The Trump administration rolled out new tariffs on steel and aluminum last month, and though many of America’s trading partners were exempted from them — including Canada — the industries are feeling the change.
More recently, the administration announced 1,300 Chinese products that could be subject to tariffs, a move intended to swipe at China for stealing intellectual property from American companies. China retaliated by imposing tariffs on American goods including soybeans, airplanes and cars.
Other changes to trade relationships could be coming. Trump’s administration has been renegotiating the terms of the North American Free Trade Agreement, a 24-year-old trade bloc comprised of the United States, Canada and Mexico.
While negotiations play out at the global level, businesses in Vermont are looking ahead at what the changes might mean for them.
This is not the first time Cote has seen the business impacted by fluctuations in material costs and the global market. He expects the effects of the tariffs will linger through the year. Project costs will likely go up with steel prices, which are already up by between 10 and 15 percent, he said.
The timelines for completing jobs will slow down, too, he expects. Steel suppliers have been so overwhelmed with orders in the face of the new tariffs that orders are now taking between 12 and 16 weeks to fill, he said — twice as long as usual.
“Some of these jobs they want done in, well … bid it tomorrow, have it done on Thursday,” he said. “That’s not going to happen anymore cause you’re not going to get steel.”
Mike Schirling, Vermont secretary of Commerce and Community Development, said the adjustments in U.S. trade relationships prompt reflection on how businesses in the state are linked to the global economy.
“It’s an opportunity for all of us Vermonters to become aware of what our place in the larger world economy looks like,” Schirling said.
Schirling expects most of the impacts to be indirect and he said that the state’s economy is “reasonably diversified.”
“We think the primary impact is cost to consumers,” Schirling said.
The public could feel the impact of higher prices, which could mean less spending. Fears of escalating hostilities in trade relationships chills investments, and the state’s exports could be impacted, he said.
Other changes in U.S. trade relationships could have reverberations in Vermont, he said.
“There are dozens of companies that are Vermont-based that have a presence in other parts of the world, distributing their products,” Schirling said.
Meanwhile, as U.S. trade arrangements with China shift, Schirling is more concerned about the future NAFTA. If the U.S. changes its trade relationship with Canada significantly, the state’s economy would feel a direct impact, he said. Canada is Vermont’s largest trading partner.
A report from Moody’s Investor Service recently found that Vermont is the third most dependent on NAFTA trade of all states, ranking behind Michigan and Texas.
However, in the short term, Schirling is not too worried about what the latest round of tariffs will mean for Vermont’s economy, and he said state officials hope that updating trade relationships will be positive overall.
“The sky’s not falling at this point,” he said.
Obie Porteous, an assistant professor of economics at Middlebury College, said last week that though the tit-for-tat between the U.S. and China has been escalating, he does not view it as a trade war at this point.
“I would hesitate to call it that just yet until the tariffs actually come into effect,” Porteous said.
Many of the tariffs that have been proposed by the Trump administration so far won’t kick in until later this year, and, Porteous said, there is a possibility that the two sides will work something out at the negotiating table.
However, businesses, consumers and the stock market have already been impacted by new tariffs. “The threat or possibility of them has already started to have an effect,” he said.
Some Vermont businesses say that changes in the global economy will increase the pressures they face.
Julian Stephens runs a 15-employee manufacturing company in Bradford that makes parts and tools for the aviation industry, including aviation giant Boeing.
The majority of the products Stephens Precision Inc. makes are made from aluminum and steel. The company is vying with other manufacturers around the globe, and it can be a challenge to stay competitive.
In some instances, Stephens has seen the costs of raw materials and processing for the Bradford company come in higher than the price of a similar completed product from a Chinese company.
Changes in trade relationships and public policy have a big effect on the business, he said.
“You’re taking an industry that’s already running on a pretty tight budget, a pretty tight bandwidth … and you’re imposing more costs on us,” Stephens said. “And those costs are significant.”
Unlike products that are made in the state like maple syrup or beer, the products Stephens Precision manufactures do not have a competitive edge because they are made in Vermont.
“If you think about it, there isn’t anything really special about a Vermont machine shop,” Stephens said.
People in other industries say that while they expect to see some impact from the tariffs, they do not expect to feel it directly.
Steve Justis, executive director of the Vermont Tree Fruit Growers Association, said the group does not anticipate Vermont orchards will be directly impacted by China’s retaliatory tariff on apples because they do not export to that part of the world.
However, there could be a domino effect on Vermont apple growers, he said. If producers on the West Coast aren’t able to export as many apples to China, they’ll likely look to sell them domestically, which would depress the prices that Vermont farmers can fetch, Justis said.
The Vermont beer industry can also expect to feel some impact, particularly from the steel and aluminum tariffs.
Rock Art, a brewery in Morrisville, worked with glass bottles for two decades, but two years ago switched to using cans — a decision driven by consumer preference, said Matt Nadeau, owner and master brewer. The brewery recently installed a new canning machine that can process 250 cans per minute.
In the brewery, pallets of colorful tall-boy cans are stacked high on top of each other.
Nadeau said industry groups have warned them to expect the price of cans to go up by about 3 cents per unit. When he crunched the numbers and factored in beverage distributors’ markup, he estimated that a case of 24 cans of beer will have a net increase of $1.50 as a result of the new tariffs.
However, he is not too concerned about what the higher price of cans will mean for Rock Art, because all businesses that use cans are facing the same price hike.
“That would be fairly true and accurate for every beverage that’s distributed, it doesn’t matter if it’s beer, it’s wine, it’s soda,” Nadeau said. “That’s the way they all mark it up.”
Ultimately, it’ll be shoppers who get stuck with that increase.
“The consumer really takes the hit,” he said.
