LONE TREE, Colo. — A 25% tariff on global aluminum and steel is now in effect as President Trump's march toward a potentially destructive trade war continues, despite warnings from economist that the move could backfire.
In anticipation of the imposed tariff on aluminum and steel goods, Carl Koelbel, a Lonetree developer building an affordable housing complex, chose to try and get ahead of the price increase of certain products.
"We started preparing for it and asking our contractors to buy the materials as soon as they can," Koebel said. "We asked our contractor to go out and purchase the 100 water heaters for this building so that we wouldn't be impacted by a price increase later."
Koebel told Denver7 water heaters weren't the only item he chose to buy ahead of the imposed tariffs. Items like plumbing fixtures and other appliances were also on that list, and don't come without extra incurred costs.
"Now, unfortunately, buying those products sooner is not cost-free for us. We have to pay for storage," he said. "We have to pay for them up front, which means we have more interest on our construction loan associated with the purchase. So even if the tariffs would not to be implemented, we would already have incurred costs trying to mitigate their effect," he added.
Koebel isn't the only local business owner dealing with such additional costs.
Bart Watson, the President and CEO of the Brewers Association, local brewers in Colorado will also potentially have similar headaches.
"I think the biggest concern is just around pricing," Watson said. "Pretty much everything that goes into making beer has gotten more expensive the last few years, so this is something that's added on top of all the inflation we've seen in the last few years, and it's gonna create a difficult choice for brewers. Do they eat that and see their margins go down, or do they pass it on to customers and risk loss sales?" Watson questioned.
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Trump's new steel and aluminum tariffs could impact Colorado crafter brewers
In Colorado, where breweries have become a staple, Watson believes local brewers will incur additional costs.
"They're going to have to look at their margins and whether they can absorb this or not, but we do anticipate it would lead to some price increase overall, as some brewers pass that cost on to customers," Watson said.
Meantime, officials at the World Trade Center Denver said they're fielding calls from business owners concerned about imposed tariffs.
"It's a huge concern for a lot of businesses, especially those that are using multiple components into their finished good," said Karen Gerwitz, the president and CEO of the World Trade Center Denver.
Gerwitz added she's also concerned for businesses operating out of Colorado that work directly with aluminum products.
"It is a huge deal," she said. "Ball Corporation makes a lot of aluminum products, aluminum bottles, aluminum cups. They're really known for their aluminum, so Ball Corporation will certainly be affected."
For those like Koebel, pushing along and trying to make the best of the situation while also working on completing the affordable housing project is what he's focused on.
"We really would love a robust onshore manufacturing industry," he said. "We would love to see it get there. The interim pain associated with it is acute for us, and we think it's only get worse."
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