Despite tariff delay, local companies already stung by effects

MILWAUKEE (CBS 58) -- While President Donald Trump on Thursday delayed tariffs his administration plans to put on Canada and Mexico, the pause came after local businesses already felt blowback from his Tuesday decision to put the tariffs into effect.

Russ Klisch, president of Lakefront Brewery, said five purchase orders from Canada were cancelled on Wednesday. Combined, those five cancellations included 2,015 cases of beer Canadian buyers planned to buy before Tuesday's tariff announcement.

Klisch said 575 of those cases were sent to ship to western Canada, while the rest were ticketed for Ontario. He shared a memo from the Liquor Control Board of Ontario (LCBO.)

"The Ontario government has directed the LCBO to immediately stop the purchase of all U.S. products," the memo, dated March 4, read. "And to remove all U.S. products from LCBO retail channels and shelves, including spirits, wine, beer and ready-to-drink and non-alcoholic products."

Klisch said he was unsure whether the purchasing orders would get renewed following President Trump's announcement the tariffs on Canada and Mexico are now delayed until April 2. Lakefront has a large export market in Canada because of high demand for its gluten-free beers.

"I just know that this is not making Canadians happy," he wrote to CBS 58 in an email. "Which I assume will affect sales in the future."

Other producers have had to change their plans amid uncertain trade terms. Kip Eideberg, vice president of government affairs for the Milwaukee-based Association of Equipment Manufacturers (AEM), said the group's members, which include Milwaukee Tool and Komatsu, have dealt with declining sales in recent days and weeks.

"I've talked to a dozen CEOs of equipment manufacturing companies in Wisconsin [Thursday], and they are all telling me the same thing," he said. "Demand for equipment has already been low. Customers are cautious, and so, if you layer in the threat of tariffs on top of that, that is having a chilling effect on the demand for equipment."

Wisconsin congressional Republicans have defended the tariffs this week. When they were announced on Tuesday, Rep. Bryan Steil (R-Janesville) maintained the tariff strategy would eventually lead to lower prices via more favorable trade terms for the U.S.

"I think, in the long term, we an opportunity to bring [costs] down," Steil said. "And I think the president is negotiating, moving forward, in the best interests of the United States."

Eideberg said AEM's members were particularly worried about a pending tariff on imported aluminum and steel, which is still set to go into effect on March 12. Klisch told CBS 58 last month he also worries about an aluminum tariff driving up costs for the brewery.

He said equipment makers are worried a 25% tariff on steel imports would allow domestic steel makers to increase their prices. In that scenario, Eideberg said manufacturers would increase the prices of their own products, leading to consumers seeing noticeable price hikes for steel-intensive heavy machinery, such as tractors and excavators.

"The uncertainty is what's going to be the biggest killer for us," he said. "The fact that Wisconsin equipment manufactures cannot move forward with planned investments, new hires, research and development because they do not know what kind of environment they will operating in tomorrow, a week from now, a month from now."

Eideberg said AEM members would prefer the Trump administration focus on simplifying permitting processes and eliminating regulations.

While pro-tariff arguments state increased tariff would drive manufacturers to bring more of their production to the U.S., Eideberg said many AEM members have already committed to global operations, and in some cases, production of certain products is less feasible in the U.S. because of materials.  

"We need certainty," he said. "We need to know that there will be no tariffs moving forward if we're gonna continue to grow, invest and drive Wisconsin forward."