By Tom Still
MADISON, Wis. – Most of the discussion at the latest meeting of the Wisconsin Technology Council board of directors centered on topics one might expect to be covered – computing and artificial intelligence, engineering trends and university research.
A less predictable conversation involved how tariffs are touching many businesses in Wisconsin, from medical-related tools and products to commercial construction to custom lighting projects.
It was a microcosm of a growing national debate over whether President Trump’s aggressive approach to global trade will bring production and jobs home to the United States – or raise prices for all consumers while disrupting vital supply chains.
Inflation rose in June to its highest level since February, with consumer prices climbing 2,7% on everything from groceries to apparel, and from furniture to appliances. That increase follows a 2.4% consumer price index in May, according to statistics gathered by the U.S. Bureau of Labor Statistics.
It’s not hard to discern the core philosophy behind Trump’s reasoning for imposing tariffs, which are taxes on foreign goods. He believes American interests are best served by leveling the playing field on a range of products, which can come from nations that pay workers less and subsidize businesses more.
The administration has quickened its pace on tariff threats in recent weeks, with announcements of 30% taxes on goods from Europe and Mexico starting Aug. 1, and similar warnings to Canada, Japan, South Korea, Brazil, Thailand and other trading partners. There are 25 nations targeted overall. Is it mainly a negotiating stance? It’s no secret Trump loves to bargain, so his approach could lead to deals in some cases.
Many economists are not so sanguine. They have predicted for months that consumers would be the first to feel the effects of tariffs, with the stock markets not too far behind. The administration continues to argue that inflation is minimal and that a reduction in core interest rates by the Federal Reserve would cure whatever ails the economy.
What’s missing in the equation – and voiced by some Tech Council board members during a July 15 meeting – is the vulnerability of the supply chain. In many cases, there are no American-made sources for some of the materials that go into production at home. If these companies could order from suppliers in Wisconsin or Wyoming, for that matter, they likely would. However, some goods simply aren’t mined, machined or manufactured in the United States, so domestic companies wind up paying tariff taxes on goods that must be imported.
Wisconsin’s economy is diverse. It includes tech-based industry, forest and farm products and one of the nation’s most concentrated manufacturing bases. That reality explains why the head of Wisconsin Manufacturers & Commerce commented on tariffs a few weeks back.
“We have members on both sides of the issue because tariffs affect businesses differently depending on what they make, grow or sell; where they sell it, and where they source components, parts and/or raw materials,” wrote Kurt Bauer, WMC’s president and chief executive officer. “Our members who oppose the tariffs are typically manufacturers who have supply chains overseas and can’t find domestic alternatives for specialty, precision or raw material inputs.”
Bauer added that while many business owners understand the goal of “reshoring” elements of the supply chain, it’s not an automatic.
“… That is easier said than done,” he noted. “You can’t just snap your fingers and find a new supplier, which often means you must pay the tariff. Those higher costs add up, eat into profit margins, and create inflationary ripples.”
Another factor: Skill levels in parts of the U.S. workforce may not fully match what’s available overseas, including those in some countries targeted for tariffs. It’s hard to replicate existing supply chains in China, Japan or elsewhere when some of those nations have a head start on workers with specific skills needed in today’s economy.
The tariffs debate is far from over, but the price pinch on consumers and a crimped supply chain might influence the conversation sooner than later.
Still is president of the Wisconsin Technology Council. tstill@wisconsintechnologycouncil.com.