Tariff tampdown: Charlottesville business owners sound off on last year’s imported goods taxes

Sigora Solar, which installed 121 solar panels on the roof of the Smith Aquatic and Fitness Center, says its been preparing for the 30 percent tariff on imported solar panels since 2017. Photo: Skyclad Aerial Sigora Solar, which installed 121 solar panels on the roof of the Smith Aquatic and Fitness Center, says its been preparing for the 30 percent tariff on imported solar panels since 2017. Photo: Skyclad Aerial

Much of the local uproar about the import tariffs levied by the Trump Administration last year appears to have died down, though concerns remain.

The U.S. government placed a duty of 30 percent on imported solar panels in January 2018, and several months later added a 25 percent tax on steel and a 10 percent tax on aluminum shipped from most countries around the world. Effective in September of last year, the Trump White House released a list of approximately $200 billion worth of Chinese imports subject to additional tariffs of 10 percent. The tariffs increased to 25 percent on January 1.

Reacting specifically to the taxes on metals and solar panels, a number of C’ville business owners sounded the alarm in early to mid-2018. Craft beer producers said they were concerned about packaging prices and equipment for expansion projects, and two solar panel companies with a Charlottesville presence were prepared to take a hit on component prices.

“We were very hopeful that the tariff would not be imposed, but we have been preparing for this since May [2017],” Sigora Solar CEO Logan Landry told local news outlets last January.

But Sigora marketing manager Madeleine Ray now says the 30 percent tariff on imported solar panels has not affected business. In fact, the company has seen greater growth rates in the last year than it ever has before, Ray says. The preparations Sigora put in place for a tariff that could have been as high as 50 percent—reducing operating costs and stockpiling panels and equipment—coupled with steadily growing domestic sales, insulated the company from adverse tax effects.

“We have not seen a slowdown in business whatsoever,” Ray says. “We used our buying power to weather the tariffs. There were some small price changes, but they were not enough to pass on to our customers. We have not raised prices.”

Home construction and improvement companies saw immediate effects from the tariffs, but the worst may be behind them, according to Builders FirstSource’s Stuart Walton, a Charlottesville-based outside salesperson for the national construction materials supplier.

Walton says metal framing costs “went absolutely crazy” from February to June 2018. Some suppliers hiked prices by 40 percent, and a number of metal shipments sat at port while companies waited on the fallout from the proposed tariffs.

“[Prices have] come back down, but I don’t think all the way to the level it was,” Walton says. “I have been doing this for five or so years, and it was probably at the lowest point it had ever been. The industry itself is realigning, so I don’t know how much of that is based on the tariffs.”

Local breweries took the tariff spotlight last September, when Senator Mark Warner visited Random Row Brewing Co. to discuss how the import duties might affect artisanal ale production. At the time, Warner suggested a trade war with U.S. allies was the wrong approach to other countries dumping cheap steel and aluminum in the domestic market.

Snowing in Space, a C’ville nitro coffee business, also expressed concerns about the tariffs. Co-founder and COO Damian Warshall, who did not respond to recent emails and phone calls, said in July last year the steel tariffs could affect his company’s ability to purchase steel brewing tanks for expansion. Warshall also expressed concern about rising aluminum costs, as Snowing in Space distributes coffee in cans. “Customers right now are paying about $3.49 for a 12-ounce can,” Warshall told the local NBC affiliate. “It will end up being maybe 12 to 15 cents more per can for the customer.”

Three Notch’d Brewing Company also distributes most of its product in cans, and brewmaster Dave Warwick says the brewery’s latest invoice from overseas can supplier Ardagh Group showed a 9 percent jump in price. “That’s the only increase we’ve seen in several years and the largest by far we’ve ever seen,” Warwick says. “We let the market dictate what we charge for our canned beer, so for now, we may be taking the hit. At some point, though, somebody is going to make the first move and you’ll see the price of canned beer increase.”

Warwick cautions he can’t say for certain the price hike is a result of last year’s aluminum tariffs. Representatives of Ardagh did not respond to emails asking about the increase.

Random Row owner Kevin McElroy shared Warner’s concerns about taxing metals from countries worldwide. “For a brewery our size, it’s more about the future of steel and aluminum costs and how it’s going to affect our plans to grow the business,” McElroy told Warner and members of the Brewer’s Association last September.

McElroy says he’s been looking into his options for expansion since last fall, and the Trump tariffs have “changed the way we are looking at how to expand.” For example, he may be more inclined to purchase used equipment. “Prices have gone up a little bit on new equipment,” McElroy says. “It hasn’t been quite as big as some people thought it would be, but [the tariffs are] still relatively new, and the fear is it can get worse.”

A handful of local businesses elected not to comment on the tariffs—a representative of King Family Vineyards in Crozet says the winery has nothing to add, and Margo Pollak of Greenwood-based Pollak Vineyards says the small winemaker makes only a few seasonal purchases from overseas. “I don’t have an obvious sense of the impact,” she says.

Joey Conover of Latitude 38 likewise says buying from domestic sources and making few capital purchases over the last calendar year has protected her firm from the spikes suppliers like Builders FirstSource might have passed on. But Walton says that has not been the case for all his buyers.

“As far as our customers are concerned, it created a huge problem,” he says. “They might have quoted jobs—take one of those buildings on West Main—and those things are locked into a price nine months before they break ground. By the time they are framing, they’re locked into a price, and we can’t eat it. I don’t know if people went belly up because of it, but a lot of people were impacted.”