Chinese Tariffs Increase While U.S. Lifts Metal Tariffs for Canada and Mexico

May was an active month for tariff negotiations in the U.S. Despite months of negotiations, the Administration announced an increase in tariffs on more than $200 billion of Chinese products on May 10, 2019. A week later, the administration lifted aluminum and steel tariffs on Canada and Mexico as progress was made on the new U.S Mexico Canada Agreement (USMCA).

Higher Tariffs

Some products used by the glass and glazing industry are among the Chinese goods affected by the newly imposed 25% tariff, up from the 10% rate implemented in September 2018.

The government also plans to impose a 25% tariff on approximately $300 billion of additional Chinese products.

Prior to the announcement, a report from the U.S. Department of Commerce showed the country’s monthly goods deficit with China was the lowest it’s been in five years. In a statement released a week prior to the announcement, the Coalition for a Prosperous America (CPA) noted the report as “a clear indication that … tariffs on Chinese imports are having a substantial impact on U.S. trade flows.”

But not all manufacturing businesses are so sure. The Window and Door Manufacturers Association (WDMA) has stressed its concerns with what the increase would do to door, window and skylight manufacturers, as well as those in the residential and commercial construction business.

Following the news, WDMA director of governmental affairs, Kevin McKenney, said the association plans to “engage with [U.S. Trade Representative (USTR) Robert Lighthizer’s office] to ensure our members are not adversely affected.”

“One of the challenges is that these tariffs are a relatively new approach for
U.S. trade policy and many companies and associations are still gauging that impact, including WDMA,” he stated via email. “It will likely take some time for our industry and others to determine the full effects.”

The WDMA has already sought exemptions from some products impacted
by the tariffs. The organization plans to work with USTR going forward on specific product exclusions for the list.

Officials from the American Architectural Manufacturers Association
(AAMA) also are anticipating when and how manufacturers and professionals in the glass industry will be impacted.

“It is unfortunate that an amicable solution couldn’t be negotiated, especially given the potentially far-reaching consequences of the latest tariff increase,” said AAMA executive director Janice Yglesias. “The impact on many fenestration industry companies will be felt to varying degrees since the materials being impacted are used in numerous components as well as manufacturing machinery. Some companies rely on materials from China to build products in America, which could be detrimental to many in our industry. The complexity of this issue warrants a multi-faceted comprehensive strategy in order to implement an effective solution.”

Glass- and glazing-related materials subject to the 25% tariff include:
• Various float glass products;
• Glass mirrors;
• Glass frit;
• Laminated safety glass;
• Glass in the mass of fused quartz or other fused silica; and
• Enamels, glazing, pigments, colors and lusters for the glass industries.

Base metal door closers suitable for buildings, base metal automatic door closers and base metal parts are also affected. Base metal, other than iron, steel, aluminum or zinc, mountings and fittings suitable for buildings are also included in the tariffs.

Lifted Metal Tariffs

The U.S. has made some progression toward an amended North American
Free Trade Agreement, lifting steel and aluminum tariffs on Canada and Mexico.

On Friday, May 17, the U.S. and Canada released a joint statement regarding Section 232 of the Trade Expansion Act of 1962. According to the statement, the U.S. has agreed to lift steel and aluminum tariffs imposed on Canada, while Canada has agreed to lift those imposed on American goods in retaliation. The countries also “agree to terminate all pending litigation between them in the World Trade Organization,” the statement said. The U.S. and Mexico issued a similar statement.

The president noted national security concerns when he imposed a 25% tariff on imported steel and a 10% duty on imported aluminum last year. However, American manufacturers and farmers were impacted when the countries hit back with their own tariffs.

Aluminum Extruders Council president Jeff Henderson says the lifting of metal tariffs on Canada and Mexico didn’t go far enough in easing the burden on the aluminum industry and its customers.

“… even though this is a step in the right direction, until all tariffs on imported primary aluminum products are lifted, and the focus is placed squarely on the Chinese aluminum industry, U.S. aluminum extruders and their customers will continue to pay the highest prices in the world for necessary imported primary aluminum units,” he says.

The steel and aluminum tariffs have impacted contract glaziers since they were first implemented in March 2018. Dustin Anderson, president of Anderson Glass in Waco, Texas, commented about how his company had been impacted.

“We have a steel fabrication department that has seen margin numbers decline. Any inflation to the customer is always met with resistance so there has to be some fine balance in there. Either way the company is impacted negatively. Since the increase on the aluminum side is pretty universal, that price increase is also universally passed along to the consumer, not hurting the current state of business but making future price increases for profitability more difficult,” he said.

The USMCA, which would replace the North American Free Trade Agreement, had been at an impasse since the tariffs were imposed last year. The USMCA has been one of the Administration’s policy priorities, but in a statement released when the tariffs were lifted, U.S. Senate Finance Committee Chairman Chuck Grassley of Iowa said the lifting of the tariffs was essential to Congress passing the agreement, which has been signed but not ratified.

Guardian Glass Inaugurates New Laminated Glass Line in Hungary

Guardian Glass inaugurated its new laminating line at its float plant in G Oroshaza, Hungary in early May 2019. Guardian invested in the new laminated glass production line to support the increasing demand for laminated glass in Europe, according to the company. The line produces both standard and coated laminated glass, as well as specialty products such as acoustic, thick, coated and colored laminated glass.

“At Guardian, we believe that the role of business is to help improve people‘s lives. Glass is fundamental to so many human needs. The desire for a comfortable living space with natural light will not be any different 50 years from now and the need to protect or preserve something while still being able to see it will not change either. This, together with the conversion of more and more residential windows from double to triple glazing, will result in an increase in glass demand across Europe in the next few years,” said Guus Boekhoudt, vice president of Guardian Glass and managing director of Guardian Europe S.à r.l., during the inauguration ceremony.

The new fully automated line is producing 150 truckloads of laminated glass per month, primarily for customers in Hungary, Romania and the Balkan countries. The new line is also a continuation of a change initiated at the plant in 2016, which saw a switch from standard clear float glass production to its higher light transmission alternative, Guardian ExtraClear, to meet the increased need for more natural daylight in buildings.

In addition to the Oroshaza plant, Guardian Glass operates facilities in Czestochowa, Poland; Thalheim, Germany; and Ryazan and Rostov, Russia, among its ten European float plant locations.

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