LI aerospace companies and others could be stung by tariffs

Aerospace contractors and other Long Island businesses could be stung by steel and aluminum tariffs proposed by President Donald Trump, industry and political leaders said Monday.

The president said that he plans to announce tariffs of 25 percent on imported steel and 10 percent on imported aluminum. A tariff is essentially a tax on an import. That tax would, in turn, make imported steel and aluminum more expensive for American companies and individuals who use goods containing those materials, ranging from cars to air conditioners to beer cans.

Tariffs could put Long Island exporters in the crossfire of a trade war, said John Rizzo, chief economist at the Long Island Association, the region’s largest business group. They would invite retaliatory taxes on goods produced by U.S. companies, he said.

In 2015, Suffolk County exported good and services worth $564 million to Canada, making it the county’s No. 1 export market, according to U.S. Census Bureau data. Canada is a large producer of steel and aluminum and has threatened to retaliate against U.S. tariffs.

Nassau’s top export market was Hong Kong.

Tariffs could benefit U.S. steel and aluminum companies, which would not have to pay the tax, Rizzo said. But tariffs would harm “many more companies in the U.S. and Long Island that use steel and aluminum in their production.”

Anne D. Shybunko-Moore, president and chief executive of Hauppauge-based defense contractor GSE Dynamics Inc., cited an email from one supplier who said tariffs would “drastically” affect prices.

“The impact is immediate,” she said, “especially when we are buying millions of dollars worth of material on an annual basis with long lead times.” GSE makes parts and assemblies for military aircraft, including the C-130 Hercules and the C-5 Galaxy transports.

Robert D. Botticelli, chairman of ADDAPT, a trade group representing Long Island aerospace companies, said that tariffs likely would “drive material costs higher,” although some Long Island companies have been willing to pay a premium for domestic metals.

Rep. Thomas Suozzi (D-Glen Cove), a member of the House Armed Services committee who has sought to promote Long Island’s defense industry, said in a statement that the tariffs “are especially bad for Long Island aeronautics suppliers” and “there are better ways to create good-paying jobs.”

Trump directed the Commerce Department nearly a year ago to investigate whether imported steel and aluminum posed a threat to national security. The premise is that a healthy industrial base is crucial to the nation’s military. The Trump administration has said, for example, that America now has only one smelter that provides the high-purity aluminum that military aircraft require.

Overproduction by China has flooded world markets with steel and aluminum, driving prices down and intensifying pressure on American producers. Nearly half the steel produced in December, for example, came from Chinese mills, according to the World Steel Association.

But the U.S. has already thrown up barriers to Chinese imports. As a result, China ranks only 11th in steel and fourth in aluminum imports to the United States. Tariffs appear far more likely to hurt a staunch American ally, Canada, which is No. 1 in both areas: It supplies 16 percent of steel and 44 percent of aluminum imported to the U.S.

“Any suggestion that Ontario-made steel or aluminum constitutes a ‘national security threat’ to the U.S. is false,” said Kathleen Wynne, premier of Ontario. “Canada and the U.S. are key allies and partners and are integral to each other’s national security.”

With The Associated Press

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.