It’s a hard truth that some kinds of manufacturing are never going to come back in the United States, and no amount of protective tariffs will change that. This truth is ignored at great peril for American workers.
American manufacturing workers don’t ask for much: a fair wage, steady work and the dignity of knowing their job matters. At the aluminum foundry in Wisconsin where I am chief executive, those jobs start at $27 an hour with a pension, a child care stipend and the security of long-term employment. Many of our people have built careers here, sending kids to college, buying homes and retiring with pride. They are exactly the kind of workers President Donald Trump says he wants to help. On that, we agree.
A disclosure: I didn’t vote for the man. But I’m not just writing this for myself. I’m writing on behalf of the roughly 1,000 workers who power our company — and who overwhelmingly did vote for him. One reason I know that is because in 2020, we hosted then-candidate Joe Biden at our factory in Manitowoc, Wisconsin, and a substantial number of our workers turned up in red MAGA hats, spoiling many a photo op. They made sure management and ownership knew how they felt.
I believe that the president truly wants to help our workers, who form a crucial part of his base. But recent tariffs targeting aluminum imports work against my employees’ interests. I honestly believe this isn’t intentional. Ironically, the president has probably helped me more than anyone at the company, thanks to the increase in the state and local tax deduction and other provisions included in the One Big Beautiful Bill.
Our business had been growing, and demand was strong in the first quarter of this year. But unfortunately, it has all been downhill since.
Our primary product is aluminum castings. We melt metal, make a mold, pour the metal, machine it, and sell custom metal parts for engines or for equipment built by our customers. All of that is done here in the United States, and we serve storied national champions of industry — think tractors, trucks, rockets.
Of any type of manufacturer, we are among the least exposed to the impacts of the new tariff regime: Our input costs are minimal because most of what we buy is raw aluminum and sand for our molds. America doesn’t make aluminum. It is so energy-intensive to refine naturally occurring bauxite into the familiar metal that it’s sometimes referred to as “solid electricity.” We buy aluminum from places such as Iceland and the Middle East, where energy costs are cheaper.
The Trump administration’s tariffs are meant to encourage domestic aluminum smelting. But they will cause real economic pain. Our input costs are up. The Midwest Premium — a fee that largely determines the cost of buying aluminum in North America — has tripled in the past six months. Our nonaluminum inputs rose 7 percent last month alone. We’ve had little choice but to pass those increases on to our customers, who are no doubt seeing even greater increases from other manufacturers. We saw the first evidence of this in the producer price index numbers released by the Bureau of Labor Statistics in early August. Wholesale prices are starting to climb, and consumer prices will soon follow.
I get notifications all day and night about big price changes. One would have to be clairvoyant to make capital investment decisions in such a situation, and opinions wildly differ as to what will come next. Will the tariffs hold? If not, when will they change? During this administration? Not until the next?
What is not debatable is that our order rate is down 35 percent to 40 percent since the start of the year. At other companies, too, demand is crumbling. In such a situation, companies have a fiduciary duty to bring costs down, and the one surefire way to do that is layoffs. At our company, we’ve had little choice but to lay workers off at all of our plants. Shareholders aren’t suffering — not yet — because the impact is being absorbed first by the very people Trump’s policies are meant to help.
I know that our challenges are not unique. We have relatively little exposure. In fact, in fact, our industry was singled out for assistance. In a different political environment, corporate America would be raising hell. Almost everyone in the business community thinks the tariffs are a bad idea, but CEOs are all too aware that saying so could put their job and company at risk of retaliation from the administration. Is that fear powerful enough to keep corporate America quiet even as consumers start to see prices increase and inflation begins to creep up for reasons that are entirely avoidable and independent of economic conditions?
Time will tell. For now, I feel as though I’m watching a tsunami video that begins with a shot of a beachside paradise on a sunny day. I encourage everyone to batten down the hatches, because a big, bad wave is coming.
About the author: Sachin Shivaram is chief executive of Wisconsin Aluminum Foundry and a member of the Main Street Alliance.
