Long Island manufacturers will have a tougher time selling their products overseas after the United States announced plans Friday to raise import taxes on Chinese goods, local executives and industry leaders said.
They also predicted consumers will likely face higher prices at Island stores for some imported merchandise.
The Trump administration’s decision to boost import taxes — known as tariffs — to 25 percent on $50 billion worth of Chinese products will ripple through the economy as the United States and China engage in a unusual trade war. The tariff hike is in response to the theft of U.S. technology, including inventions and research, President Donald Trump said in Washington.
Jamie L. Moore, president of Ignite Long Island, formerly the Manufacturing Consortium of Long Island, said local factories share Trump’s concern about China but they worry that his response will cause an economic downturn. Moore’s group has 90 members.
“There are numerous local companies who have either moved out of the Chinese market or did not enter it due to real concerns over protecting their intellectual property, technology,” he said Friday.
However, “since the start of the tariff threats, even more companies are putting their international expansion efforts on hold out of concerns about retaliation” from foreign countries, Moore said.
China is among the top three export markets for Spectronics Corp. in Westbury, a manufacturer of ultraviolet lighting equipment and fluorescent dyes used to detect fluid leaks in engines, machinery and cooling systems. Forty-eight percent of the company’s annual sales of $25 million to $30 million are to foreign countries.
Spectronics president Jon Cooper said a trade war with China could lead his customers to buy less or to postpone purchases as they contend with higher costs. The company, which has 180 employees, is raising prices due to the higher cost of steel components that it uses after an earlier tariff hike by Trump.
“Our fear is customers in these market sectors will purchase less from us,” he said. “What the Trump administration is doing makes no sense…This will hurt American producers and American consumers.”
Some experts warned that U.S. trade tensions could expand beyond China.
Rakesh Gupta, a business professor at Adelphi University, called Friday’s decision “another step down a very slippery and dangerous slope” that could lead China and Europe to cooperate against the United States.
The tariff increase, which takes effect July 6, follows a trade dispute begun in March between the United States and much of the world over imported steel and aluminum.
Tariffs on foreign steel and aluminum of 25 percent and 10 percent, respectively, have negatively affected a diverse group of local factories, from guitar-string maker D’Addario & Co. in East Farmingdale and defense contractor East/West Industries Inc. in Ronkonkoma to Thuro Metal Products Inc. in Brentwood, executives of those companies have said.
China is a key export market for Long Island businesses. And exporting, in general, has grown in importance since 2005, according to data from the U.S. Census Bureau.
Local exporters access China, the world’s most populous market, through Hong Kong, which serves as the commercial gateway to Asia. Hong Kong is top export destination for companies from Nassau, accounting for combined sales of $1.3 billion in 2015, the most recent available data. Hong Kong is Suffolk’s No. 3 export destination, with $302 million in 2015 sales.
The impact on Long Island of the U.S.-China tit-for-tat will be muted because of economic diversity: no one single industry drives commerce here, said John A. Rizzo, chief economist for the Long Island Association business group and a Stony Brook University professor.
“I don’t think this will be devastating for Long Island but it will be bad,” he said. “Prices will rise and consumers will pull back on spending. That’s a problem when consumer spending represents 70 percent of economic activity.”