Tariffs and the Lifting Industry: What to Know as April Unfolds

Introducing the Podcast: Tariffs Updates

– [Ben Hengst] Global supply chains are shifting with constantly evolving tariffs, manufacturers, distributors, and suppliers are bracing for impact. Today, and to timestamp this because things are evolving daily, we are recording this on Monday, March 31st. I’m sitting down with Jim Takacs, Mazzella’s Director of Corporate Supply Chain, to break down what’s driving these changes, where the effects are hitting hardest, and what our customers and industry partners need to be watching.

Background on President Trump’s Tariffs

– [Jim Takacs] Well, first and foremost Ben, thanks for having me on this podcast. It’s a pleasure to be here with you. Really what’s going on in the marketplace is a very, very turmoil, unsettling landscape because of what Washington right now is doing with tariffs.

President Trump wants to boost the domestic manufacturing in our country. He wants to make it more expensive for products to ship into the US versus being produced here, right here in the country. Remember, president Trump is a builder, right? So he takes that viewpoint, and that’s what he wants for American manufacturing.

In the last, you know, three to four decades, so many American companies have taken their production, their jobs to other countries. So President Trump wants to bring them back into this country here.

Second of all, our trade policy right now is very much one-sided. We’ve got really a $1.2 trillion trade deficit right now that the president wants to flip and go the opposite way ideally. So right now, president Trump feels our trade partners have been unfair to us and have taken advantage of the US in the last few decades.

Third of all, we’ve got a $36 trillion economic deficit. So one of the ways to help turn that tide is to help with income coming into the country, and that’s through tariff income, moving forward.

What is probably the most important thing in my mind right now in what President Trump did back in 2018 versus Trump 1.0, was he put section 232 tariffs on steel manufacturing. At that point in time, it was about 76%, way below where capacity needed to be. So we’ve got to be able to protect ourselves for national security. So if we have to go to war, we have to build planes, we got to build ships, we got to build tanks. All of the stuff required for national security, you have to have a strong domestic steel production moving forward.

And five is the most obvious one that most people know about the drug and border crisis with Mexico and the southern border and with Canada above on the northern side. So they actually were the first two countries along with China to be impacted the most, and at first, at the beginning part of March with the first wave of tariffs.

What Is Happening With Tariffs Right Now?

– [Ben Hengst] So that’s all the background and everything. So what’s happening with tariffs right now?

– [Jim Takacs] So right now what we have is three layers of tariffs. What happened, like I just mentioned, with Mexico, China, and also Canada was early March, 25% at this point in time.

As of March 12th, all steel production, all countries, 25% tariff. Okay, that’s a lot. That’s significant. And more importantly, moving forward, we’re going to have a reciprocal tariff announcement that’s going to be happening on the second of this month coming up here in April. So that’s a game changer. That’s all about making sure that the tariffs that get charged, the duties if you will, that other countries charge the US.

The administration wants to have that same reciprocal tariff put against those products coming into the country. So that’s going to be on every commodity, not only steel and aluminum, but you’re looking at energy, you’re looking at agriculture, computer chips, et cetera. So it’s going to be a significant week here coming up.

How Are Other Countries Responding to New US Tariffs?

– [Ben Hengst] So how are the other countries responding? Do we have any idea of that yet?

– [Jim Takacs] Well, right now that’s what they’re wavering, that’s what they’re figuring out what they want to do. They’re going to have to make a decision. Okay, if US charges, our country charges 2 to 3% on tariffs, call it duties, coming into our country, some of our trade partners are over 10%, 10 to 15%. So you can easily see the financial difference between the two.

So right now, what President Trump wants to do is get them to lower their tariffs on exports leaving our country going into theirs. If they don’t, their imports coming into the US will have the same tariff value. So you’re going to go from paying duty if you’re a foreign country of, let’s call it 3%, to 10, 12, 15% based on what country we’re talking about.

How Are Tariffs Affecting Mazzella and the Lifting Industry?

– [Ben Hengst] So how are these changes affecting the day-to-day businesses of companies like Mazzella?

– [Jim Takacs] Well, right now, what we have to do is take a look at all of our suppliers, all the products that we buy, and we have a very good idea of what that looks like. We know the countries of origins of everything that we import moving forward.

So right now, what’s happening is any company that’s a true importer that produces product overseas, not in the US, they really have only one choice. Then they have to go and they have to put that tariff value in the cost of their goods. If not, they’re going to eat away at their profit, right? So they’re going to be passing on and have already started to pass on tariff values to their customer base.

Well, what that means is in the entire supply chain, that’s going to have to be pushed on because that’s just the reality for direct importers at this point. They have no opportunity to bring in manufacturing to the US, they produce in Europe, or they produce in the Pacific Far East. So if you choose to buy an imported product, then you have to know where the country of origin is, because there’s most likely going to be a significant upcharge on the product value. And that’s what we’re trying to mitigate as a company here. But at some point in time, global supply chains are what they are. You can’t eliminate that. So it’s going to be very interesting to see what happens here long term, Ben.

How To Navigate Tariffs as a Lifting and Rigging Business

– [Ben Hengst] Yeah, so short term, what are some of the noticeable short-term effects that we’re seeing today in the industry and what should customers be made aware of?

– [Jim Takacs] Well, my advice right now, for anyone out there listening to this podcast, whether you’re, you know, another distributor like we are, or you’re a customer, be aware of where the products are actually coming from, where they’re being produced.

Do some education, you know, find out on your own where that product is actually manufactured. Then you’ll have an idea about where your costings are going to end up ultimately. What you have to do is do some homework. You know, that’s what we’re doing.

So we know, like I said just a few moments ago, where we can buy domestic and where it makes sense, we’ll do that. But there are some very, very excellent fine manufacturers that produce overseas that’s not here in the States. So to eliminate overseas product. It’s impossible. It’s part of our supply chain being a global supply chain. And frankly, most manufacturing companies or distributors have a global supply chain and you really can’t get away from it.

How Tariffs Affect Manufacturers vs. Distributors

– [Ben Hengst] Yeah, so how is that affecting companies like Mazzella who are both distributors and manufacturers?

– [Jim Takacs] Yeah, good question Ben, Mazzella is unique in the fact that we are a manufacturing company and we’re also a distributor. So we buy coil, we buy plate, we have mill direct purchases from mills around the globe, okay?

So on the manufacturing side, we have to make a decision to buy domestic or do we need to augment our supply of product with foreign suppliers? The answer there is most likely yes, long term. Global manufacturing on steel and raw materials is what it is. You have to have that in your mix.

When we talk about our position as a distributor, well, we deal with, like I mentioned earlier, direct importers and, more importantly, steel and hardware, wire rope suppliers that are domestic manufacturers. Well, they have production here in the States, right? They also have global production. Many have plants that produce product in Europe offshore. And the reality of it is, even though they’re a domestic supplier, they still have product coming in from outside of the US.

So whether we import the product or the manufacturer imports their own product, they still have to get the product through customs. They’re still going to have to pay a tariff on steel. And what are they going to do? They’re going to either eat it or they’re going to have to pass that along to their customers and their supply chain moving forward.

So, you know, Mazzella is unique in the fact that we have manufacturing for sure, that we support with raw materials and mill direct buys. And we also buy from the biggest manufacturers in the lifting rigging industry. And you know, most of those are domestic suppliers, but they also have very much impactful global supply chains for how they acquire all their products.

How Will Tariffs Affect the Supply of Product?

– [Ben Hengst] So you mentioned building the cost back into the price, but how is this going to affect the supply of product, getting the product out there? Is there going to be any effect on that?

– [Jim Takacs] Well, right now there is no supply issues. Actually, once we left the COVID couple of years, supply chain, as many, many people know, was very chaotic. A lot of challenges out there.

Well, in the last year or so, supply chains really have gone back to pre-pandemic stability at this point, which has been very good. So the tariff situation is really brand new. It’s only been really in the mix here for the last, you know, two months here at this point in time.

So there’s no raw material shortages. Companies are still going to be producing product wherever they have a plant at this point in time and long term they’ve got to make a decision. If we’re a domestic company, do we move that product and that manufacturing back to the States? Or set up an operation here in the States to not be tariffed. And that’s what a lot of manufacturers have to be starting to take a look at right now.

What Should Mazzella’s Customers, Suppliers, and Partners Be Watching for Right Now?

– [Ben Hengst] So if you’re a customer, supplier, industry partner, what are some things that you should really be paying attention to in the upcoming, yeah few days?

– [Jim Takacs] Well, right now what we know this week, first couple days into April, that’s when the reciprocal tariff initiative is going to take place. Everyone has heard right now that there is going to be a significant tariff put on foreign automotive manufacturing. Well, if you look at the automotive landscape, the US economy follows that pretty closely. So what’s going to happen in the next couple days? Will the automotive industry see chaos? Maybe, we’ll see.

Think about it, you have a European manufacturing car being assembled in Mexico and then it gets imported into the US to support US sales. That’s what European automotive manufacturers are dealing with. It’s no different from any other industrial supply chain, it’s just different products, right? So that’s what the lifting industry is also seeing, but at a lower level, if you will, okay?

So what we’re going to see right now in 2025 is a lot of uncertainty, because we don’t know where the tariff situation’s going to go. You know it could end quickly, it could go on long term. It just depends on how the US economy responds to it.

Are we going to see slow down of foreign goods and foreign desires to buy those products? We’ll see, the lifting industry has a lot of those types of suppliers. We could see the stock market being affected in a negative way once next week rolls around with the automotive situation, we don’t know that.

So there’s a lot of uncertainty going on right now in the marketplace that we’re going to find out here in the next few months how this is all going to shake out.

So what Mazzella and other leading manufacturers and distributors have to do right now is understand the landscape, mitigate the issue as best as we can. We’re not going to eliminate, it’s impossible on foreign product. It’s part of the product mix. There are so many products that do not get made in the US that only gets produced overseas. So that has to stay in the mix. But we all know that right now they’re being tariffed by 25%. So we are going to have to adjust costing moving forward and has started to do that where it’s applicable.

So my advice to everybody who is listening to this, just educate yourself on the landscape of what’s going on right now with tariffs.

I will also add Ben, to your point about what we’re also seeing. The cost of steel in raw materials has been very stable in the last six to eight months. Now, right now, with some of the uncertainties that we’re seeing in the marketplace, surcharges right now for wire rope in the last three months have increased, okay?

So now we’re seeing $180 per ton. It’s been close to two years since we’ve had three consecutive months where we’ve seen some surcharges actually go up, and now lead times are starting to be not as consistent as they were.

What that means is manufacturers are starting to see some, you know, instability. What does that mean? That’s going to ultimately mean prices and inflation’s going to actually happen, right? So throughout all this, the uncertainties with the tariff, it’s going to affect supply a product to some degree. It just depends on what we see here in the next few months.

How Might Reciprocal Tariffs Affect the Lifting Industry?

– [Ben Hengst] So we’re shooting this on March 31st, this week, supposedly April 2nd, there’s going to be announcements. What are you expecting from those? And then also how quickly do you think that that’s going to affect the industry?

– [Jim Takacs] Well, right now we know there’s going to be a major announcement on reciprocal tariffs. President Trump has postured a little bit on this one, has made some comments that it won’t be as strong. I heard that over the weekend, quite honestly.

So we’ll see. I mean, we don’t know right now how that’s going to unfold. I think the biggest factor is going to be what happens with the automotive industry. President Trump feels, hey, this is a way to get the US economy and income back into the country. So there’s going to be some smaller short-term pains, if you will, on pricing. But the long-term effect to the US economy will be beneficial. And that’s his mentality right now. So we’ll see if that continues.

One of the biggest things that was announced over, well last weekend, I heard on a report that, you know, $3 trillion of new US investment has been announced by Washington from Ford, Honda, Nissan, J&J Apple, GE Auto Space, players like that. Huge, significant, large sized global producers, right? They’re looking to bring manufacturing back into the US.

Well, the tariffs have had a lot to do with that. So that’s a positive impact from that standpoint. That’s new production, that’s new plant building, new jobs here in the US.

So the lifting industry follows that, you know, at this point in time, we will see how many manufacturers want to increase their US production here at Stateside. I’m sure some will, I hope they do. They won’t be paying the tariff value and they won’t have to worry about passing that on in their supply chain at this point in time. But we’ll see what happens.

2025, Ben, is going to be a bit of a turmoil year in terms of where all the tariff specifics are going to be heading, and it’s going to be interesting to see for sure.

Market Predictions for the Rest of 2025

– [Ben Hengst] Any other predictions for the rest of the year, second half of the year?

– [Jim Takacs] Well, you know, to predict something is difficult. I do think right now we’re sourced very, very well to take care of our customer base. We have very deep, solid relationships with all the key manufacturers, and that’s important to making sure we take care of our customers. So I don’t anticipate any supply issues. There may be some cost issues, you know, because of this tariff. Matter of fact, on the import side, there certainly will be.

Something to keep in mind is, every manufacturing domestic major player has a global supply chain. They’re either buying raw materials from a global international foreign source, or they’re producing in a country in Europe or the Pacific Far East, right? Any way you look at it, some of their products have to go through US customs and they will be subject to this tariff situation that we’re talking about. So, is there a true manufacturer out there that only has US production? Very, very small amount.

Our importance to make sure that we take care of our customer base and to grow this business is paramount based on how we source products. But to eliminate international suppliers, it’s an impossibility at this point in time. So let’s continue to watch this situation and more to share with you in the next couple weeks.

Stay Informed: Come Back for More Updates

– [Ben Hengst] So this isn’t over yet. Again, things are evolving daily. Things may have changed between the date that we recorded this, March 31st, and the day that this is released. But we are committed to keeping you updated. So as we know, you’ll know, we’ll keep these updates coming. If you have any questions, drop them in the comments. My name is Ben, stay safe out there.

Thanks, Jim.

– [Jim Takacs] Thanks Ben. Appreciate it.