The owners of 6 Bears & A Goat Brewing Co. in Stafford County use aluminum cans to package their beer because that keeps it fresher and is more convenient for customers than glass bottles.
So a 10 percent tariff on aluminum imports imposed by the Trump administration in June directly affects their business.
“The increase is only a couple cents per can,” said head brewer Chuck Arnold. “But when you’re canning around 9,000 at a time, a couple cents hurts a small business like ours.”
And since the craft brewery market is competitive, Arnold said 6 Bears & A Goat is absorbing the extra cost.
“If we raise our prices and someone else doesn’t, the customer is going to buy the least expensive option,” Arnold said. “It’s very difficult to add that cost to the customer.”
Even so, Arnold said the brewery is willing to take the hit. Six of its founders served in the Coast Guard and another was in the Navy (the name of the business comes from the mascots for those services).
“I know there’s a bigger picture to make sure we have a fair market for our products,” Arnold said. “If we want everyone to buy American, there’s going to be a small price to pay for that.”
On June 1, the United States imposed a 25 percent tariff on imports of steel and a 10 percent tariff on aluminum imported from the European Union, Canada and Mexico, which prompted some of those trading partners to implement retaliatory tariffs.
In July, the administration imposed 25 percent tariffs on $34 billion in Chinese imports and another $16 billion in tariffs on Chinese imports are scheduled to go into effect on Aug. 23. China has retaliated by announcing tariffs on an equivalent amount of U.S. goods.
According to the U.S. Trade Representative’s office, the new levies are “part of the U.S. response to China’s unfair trade practices related to the forced transfer of American technology.” Tariffs are also considered necessary by the Trump administration to press China to halt violations of U.S. intellectual property rules.
While much of the debate over tariffs has focused on safeguarding intellectual property and reviving industrial jobs in the Midwest, the levies have a far-reaching impact that includes the Fredericksburg area.
Universal Dynamics, which relocated in July from Woodbridge to Spotsylvania, is owned by the Piovan Group, an Italian company that supplies ancillary equipment and services to multiple industries worldwide.
Producing storage, conveying, blending, drying and size reduction equipment, as well as supervisory software solutions, the new facility near Shannon Airport in Spotyslvania County is Piovan’s headquarters in North America. Next year, Universal Dynamics will become the manufacturing center of Aquatech process water-cooling equipment.
Stephen Nunn, president of Piovan North America and a Fredericksburg resident, said before the steel and aluminum tariffs were imposed, his company was paying 39 cents per pound for steel.
“Now we’re paying 53 cents a pound and it may go to 60 cents a pound, nearly 40 percent more than we were paying before,” Nunn said. “For a manufacturing company like ours, this could represent 25 to 50 percent of total manufactured goods.”
Nunn said U.S. companies that have parts made in Mexico with assembly in Canada, for example, are intertwined.
“The tariffs are affecting raw materials and driving prices up,” he said.
“But it’s more than that, people should realize it’s more than just consumers paying more,” Nunn added. “Ultimately, what you’ll see if these tariffs continue is that companies won’t build factories in the United States, and all the highly skilled, local tradesmen won’t have jobs.”
Tariffs announced on Canadian newsprint in January have added to the financial issues many newspapers across the United States are facing, and forced many to lay off employees or reduce pages. But seven months later, White Birch announced plans to reopen its Bear Island newsprint mill in Hanover County, creating 140 jobs.
White Birch President Chris Brant did not mention whether the tariffs played a role in the decision, saying in the company announcement only that “short- to medium-term market conditions will accommodate, if not welcome, some relief from recent shortages in supply.”
Farmers in Virginia are also seeing effects from the trade war. The Chinese response includes a 25 percent tariffs on soybeans.
Glenn Dye, chairman of the board and past president of the Virginia Soybean Association, grows soybeans in Stafford County’s Hartwood area, and also has farms in Fauquier and Appomattox counties.
“One in three soybean rows go to China,” Dye said. “That’s the magnitude this thing has. It’s a very big deal.”
Dye said 98 percent of Americans are not involved in agriculture and don’t understand the needs of the industry.
“People don’t even recognize a soybean plant when they see it,” he said. “Two percent of Americans are feeding everyone else. We do a great job at producing food and feeding the world, but we need open markets to trade our product.”
In July, the Trump Administration announced a $12 million bailout to farmers in an effort to alleviate the side effects of the tariffs. Dye said he would prefer to see trade talks and agreements made to open the market rather than a bailout.
“It’s just a Band-Aid. Ultimately, we would be losing far more than what we would get from any bailout,” Dye said. “I’ll say any help is appreciated, but it’s a very short-term solution. We’ve got a long-term problem right now.”
Some have said the U.S. trade strategy is like a drinking game—a bet that the U.S. economy can sustain the hits better than their opponent’s economy can.
James Alford is a Stafford County attorney who assists U.S. and foreign clients on energy and infrastructure projects, with a particular focus on Central and Latin America and Mexico. Citing U.S. withdrawal from the Trans–Pacific Partnership and uncertainty in the future of the North American Free Trade Agreement, Alford said it appears Trump favors one-on-one negotiations.
“This administration seems to have an aversion to multilateralism,” Alford said. “Whether that will succeed or is advisable is unknown.
“Everyone would agree something should be done about China,” he said, “but the current methods are creating a geopolitical realignment that is changing how other nations see the U.S. as a trade partner. They’re looking at making deals with China or Russia as a result, which ultimately may not be in our best interest.”
Luanne Pann, who runs Pann International, a Stafford County consulting firm she started that helps those interested in doing business between China and the U.S., said for businesses to grow, they need to look outside the U.S.
“To make America better and stronger, we can’t just keep to ourselves,” Pann said. “For our economy to grow, it’s important to trade with the rest of the world. For a strong economy and healthy employment, the answer really is doing trade globally in order to grow consistently.”
Pann said, “I’ve compared the U.S. and China to an old married couple who fight all the time, but can’t live without each other.”
Pann, who grew up in China, moved to the U.S. in 1980 and earned degrees in engineering and law. She started her consulting firm a couple years before China was admitted into the World Trade Organization in 2001.
“So I still feel the U.S. and China still need each other—maybe they’re talking about divorce, but would never go through with it. They can’t afford it,” Pann said. “I do believe eventually all this tough talk and rhetoric eventually will resolve itself, but in the meantime, we need to find ways to work with it.”