US tariffs on aluminium weigh heavily on Wisconsin manufacturer

The recent expansion of United States tariffs on aluminium imports has increased the pressure on manufacturers who depend on the metal as a critical input. Wisconsin Aluminium Foundry (WAF), a century-old producer of aluminium and copper alloy castings based in Manitowoc, exemplifies how policy decisions made in Washington have had ripple effects on local economies.

Image source: https://wafco.com/

On June 4 this year, tariffs on imported aluminium were doubled from 25 per cent to 50 per cent. By mid-August, the administration broadened its scope to include more than 400 derivative products containing aluminium or steel, according to the Bureau of Industry and Security. While these moves were designed to strengthen domestic production, their effect has been more complex for manufacturers like WAF.

A rising cost base

WAF chief executive Sachin Shivaram has been forthright about the company’s struggle to stay competitive. “We buy aluminium, and we buy sand, and then humans transform those simple elements into something complex,” he said, underscoring the way raw materials underpin the firm’s value-added processes.

But tariffs inflate costs at the very start of that process. “Primary aluminium is something that's always going to be imported into the United States, no matter what kind of tariffs we put on whatever it is, and so by the tariff, what they've done is increase the cost of a key input material for us,” Shivaram explained.

Also read: American Aluminium Industry: The Path Forward

Electricity costs make it impractical to smelt aluminium locally in Wisconsin. Instead, producers rely on imports from regions with abundant cheap energy. As Shivaram pointed out, aluminium production flourishes in “Trinidad and Tobago, Canada, and Iceland, the Middle East, where, frankly, they don’t have any better…manufacturing uses for it, and they direct that electricity to the highly energy-intensive production of primary aluminium.”

Competitive disadvantage

For WAF, the higher cost of imported aluminium translates into weaker pricing power abroad. “We lost an order to a Canadian competitor who is now starting out with aluminium costs that is more than 50 per cent cheaper than what we’ve started out with,” Shivaram noted. “So, the tariffs have created a competitive disadvantage for us.”

This has real consequences for workers. “It has affected jobs already...our facilities in Iowa and Indiana, we laid off probably about 150 to 200 people just because the demand is down,” he confirmed. The company’s hiring capacity has been dented as well: “First shift is pretty full, second and third shifts, we could hire 60-70 per cent more people.”

Community ties beyond economics

Despite these headwinds, WAF remains a cornerstone of Manitowoc’s industrial base. “An employee who immigrated from Mexico years ago built a small family here over 25 years; his daughter just graduated from UW-Madison, he vacations in Kentucky to see music festivals, and these are the types of stories a great job can facilitate,” Shivaram said. “The types of jobs that we are creating are great jobs. These are jobs that the American dream is built on.”

Calls for a more measured policy

Shivaram is not opposed to tariffs per se but argues for a more collaborative and permanent approach. “The rollout has been chaotic and not actually incorporating our voices. So, I’d urge him to sit down with trade associations, the National Association of Manufacturers, and other groups. And then think of a strategy that has permanency. So maybe supported by some legislative outcomes.”

As trade policy continues to evolve, the WAF case is a case study in balancing the protection of domestic industries without unnecessarily harming them. For now, rising tariffs seem to be transforming both supply chains and the jobs of workers in America’s manufacturing sector.

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