Trump's tariffs create the 'Wild West' on Wisconsin's factory floors

By Timothy Aeppel

BRILLION, Wisconsin (Reuters) - AriensCo - a manufacturer of bright orange snowblowers - has braced for the cold blast of tariffs since November. 

"I mean, he campaigned on tariffs," said Nicholas Ariens, president and chief operating officer of the family-owned manufacturer in Brillion, Wisconsin, referring to President Donald Trump's frequent vows to boost import taxes if elected, "so we've basically been preparing since the election."

That's included contacting all their suppliers to assess those firm's exposure to tariffs. AriensCo makes most products in its U.S. plants with mostly U.S. materials, but could end up paying more for raw materials like steel and imported components, while its exports to places like Canada could get hit with counter tariffs.

Wisconsin is one place where a full-on trade war could be particularly painful given its economy's close ties with Canada and the fact that it's a key political prize that has been determinative of who gets the White House and has swung back and forth between the two parties in recent elections.

Ariens said there isn't much real action the company could take so far, other than stock up a bit on a few commodities, given uncertainty about how the looming trade battles would unfold.

Industrial America is now making those calculations. And the numbers don't look good. Many manufacturers, including the Detroit automakers, have rushed to Washington to plead for delays or exemptions, creating a free-for-all atmosphere as new tariffs are announced, then rescinded or modified within days, as demonstrated with last week's temporary reprieves for automotive products and other goods covered under the U.S.-Mexico-Canada Agreement on trade.

The specter of ever-mounting tariffs has roiled stockmarkets, sending the S&P to its lowest level since September and wiping out the "Trump Bump" that stocks saw after the election. It's also sparked worries about a new pulse of inflation that could complicate the Federal Reserve's efforts to tame price increases and get inflation back to its 2% target.

But the mood among manufacturers in Wisconsin, a swing state that voted for Joe Biden in 2020 but then jumped to Trump last fall, is so far surprisingly chill. The state is populated with key Republican constituencies, including farmers, who are counting on favorable treatment even as Trump implements trade policies set to roil the local economy.

"We’re definitely not panicked," Ariens told Reuters at his main plant in the small Wisconsin town where the business has operated for 91 years.

'NOT SHAKING IN OUR BOOTS'

One reason may be that supply chain disruptions have become more routine. The tariffs on China during the first Trump administration caught many by surprise. As manufacturers rushed to adjust, including a scramble by many global producers to move out of China to other low-cost countries like Vietnam or Mexico, they were hit with the onset of the Covid pandemic, which created even more pressure to rethink where to have things made.

Nick Pinchuk, CEO of high-end tool maker Snap-On in Kenosha, said any tariffs will add to his costs, hamper exports of his company’s trademark tools to Canada, and generally create unneeded turbulence. Still, he added, "We’re not shaking in our boots."

Pinchuk likes to say they're not immune to tariffs because they do sell tools in Canada, but they are resistant. 

Wisconsin is a frontline in this trade war, especially as it relates to nearby Canada. In 2024, the state exported $7.9 billion worth of goods to its northern neighbor, everything from farm machines to car parts - more than shipments by the state’s manufacturers to Mexico, China, Germany and Australia, according to the Census Bureau.

The state is also exposed at the gas pump. Trump's Canadian tariffs include 10% on energy, much of which is not eligible for the one-month waiver. Wisconsin gets much of its oil and gas from Alberta, funneled into the state’s sole refinery in Superior. Underlining Wisconsin’s northern exposure: That refinery is owned by Canadian oil and gas producer Cenovus Energy.

Kurt Bauer, president of Wisconsin Manufacturers & Commerce, said tariffs will drive up energy costs for manufacturers, farmers, and shippers. He said experiences of recent years are guiding their response now.

"Covid was really a test that showed how resilient and nimble companies could be," he said.

HIGHER PRICES

KI, a contract furniture maker based in Green Bay, will need to be nimble. It produces most of what it sells in its five U.S. plants. It also has a factory in Ontario that’s responsible for about $50 million of the company’s $800 million in sales, and 90% of those sales go as exports to the U.S.

"It’s sort of the Wild West out there right now," said Brian Krenke, CEO and president of the employee-owned company. He’s still assessing what to do about his plant in Canada. "They change things every two weeks, so it’s hard for any manufacturer to have an effective response."

One thing he is doing is raising prices. The debate over tariffs often gets caught up over who will pay the tax. The answer isn’t simple. While the importer pays the tax, that sets in motion a tug-of-war among various layers in the supply chain. In some cases, manufacturers in foreign countries will agree to lower prices to absorb some of the cost.

Krenke is designing a two-part solution: He plans to raise prices to account for higher raw material costs, like pricier steel, but also create a "tariff surcharge" for cases where he can use this as a marketing tool. For instance, he said the best office chair mechanisms come from Italy, so he envisions offering buyers a chance to opt for chairs with that added feature, with a surcharge, or a less expensive alternative.

Greg Petras may also boost prices. He's president of Kuhn North America, owned by France’s Kuhn Group, which makes farm machinery, including manure spreaders and feed mixers, at its Wisconsin plant. It also has a plant in Kansas.

Kuhn produces 70% of what it sells in North America at those two plants, but the rest come from Europe. Given the size and specialized nature of these imported machines, it would make no sense to try to recreate that production inside the U.S., said Petras. It would also be far more costly.

Petras said if the impact is as high and broad as threatened, he expects to push through price hikes "in weeks, not months," because "we can’t afford to get behind on this."

Back at Ariens, Nicholas Ariens said it's too early to assess the full dimensions of the tariff impact and what this may do to prices. He said it's even "unclear in the short term" whether his machines are considered compliant with the USMCA.

The company also makes lawnmowers sold through major retailers like Lowes. Pushing price increases on them is never easy.

"I couldn’t say what percent we could eat versus pass through," said Ariens. "At some point, there’s definitely a tipping point," where you can’t avoid passing higher costs on to consumers. "We’re certainly not there yet."

(Reporting by Timothy Aeppel; Editing by Dan Burns and Anna Driver)