Nail Manufacturer threatening to move to Mexico over Tariffs.

[SavannahMann]

You see, the customer, the one buying the Nails, doesn't want to pay more for the nails. If you can produce good quality at a reasonable price, then people will buy from you. If you produce good quality and a higher price, then the cheaper alternative suddenly becomes more attractive.

Paid Program: Nail Maker Feeling the Pinch From Steel Tariffs

Nail Maker Feeling the Pinch From Steel Tariffs

partners.wsj.com

Mid Continent Nail Corp in Poplar Bluffs, Missouri, laid off 60 of its 500 workers on June 15, and the company plans to cut 200 more by the end of July because of the tariff.

On March 1, US President Donald Trump announced he would impose tariffs of 25 percent on imported steel and 10 percent on imported aluminum to save US jobs, effective June 1.

Mid Continent gets steel for its nails from parent company Deacero in Mexico. Deacero must pay the 25 percent tax for materials shipped to Mid Continent despite the steel being sent to its own company.

The last major nail supplier in the country says the tariff has caused a 50 percent drop in sales, an increase in its prices and has driven customers to buy cheaper nails elsewhere.

The company is in danger of shutting production by Labor Day unless the Commerce Department grants it an exclusion from paying the tariffs, company spokesman James Glassman told CNN on Tuesday. Mid Continent Nail is “on the brink of extinction,” he said.

If you are wondering, this is exactly what we were told would not happen. Companies here in the United States would become more competitive and corporations would move manufacturing to the United States because of the Tariffs. Suddenly it doesn't seem to be the case, as if we all didn't see that coming.

How long before Trump slaps Tariffs on media companies reporting this bad news to Americans?

 

[iliveonramen]

Uncertainty, reciprocal tariffs, even if you build everything in the US right now, you're better off moving some production overseas to service the rest of the world.

I know the situation in the article is slightly different, it's about the COGS going up for this nail company, but there's a myriad of reasons these tariffs are just going to depress states side manufacturing.

Trump and Co are idiots, lets be clear about that. I even read a recent article that listed out how Trump's executive order was written in a way to mistakenly cause tariffs for Japan to go up from the 20 something % to 40 something %.

It's a constant refrain of mine, I don't know how anyone can look at Trump and think "Presidential material", but here we are. We are turning more and more into the ideocracy.

 

[noonereal]

You see, the customer, the one buying the Nails, doesn't want to pay more for the nails. If you can produce good quality at a reasonable price, then people will buy from you. If you produce good quality and a higher price, then the cheaper alternative suddenly becomes more attractive.

Paid Program: Nail Maker Feeling the Pinch From Steel Tariffs

Nail Maker Feeling the Pinch From Steel Tariffs

partners.wsj.com

Mid Continent Nail Corp in Poplar Bluffs, Missouri, laid off 60 of its 500 workers on June 15, and the company plans to cut 200 more by the end of July because of the tariff.

On March 1, US President Donald Trump announced he would impose tariffs of 25 percent on imported steel and 10 percent on imported aluminum to save US jobs, effective June 1.

Mid Continent gets steel for its nails from parent company Deacero in Mexico. Deacero must pay the 25 percent tax for materials shipped to Mid Continent despite the steel being sent to its own company.

The last major nail supplier in the country says the tariff has caused a 50 percent drop in sales, an increase in its prices and has driven customers to buy cheaper nails elsewhere.

The company is in danger of shutting production by Labor Day unless the Commerce Department grants it an exclusion from paying the tariffs, company spokesman James Glassman told CNN on Tuesday. Mid Continent Nail is “on the brink of extinction,” he said.

If you are wondering, this is exactly what we were told would not happen. Companies here in the United States would become more competitive and corporations would move manufacturing to the United States because of the Tariffs. Suddenly it doesn't seem to be the case, as if we all didn't see that coming.

How long before Trump slaps Tariffs on media companies reporting this bad news to Americans?

These tarrifs are a disaster.

 

[vanceen]

You see, the customer, the one buying the Nails, doesn't want to pay more for the nails. If you can produce good quality at a reasonable price, then people will buy from you. If you produce good quality and a higher price, then the cheaper alternative suddenly becomes more attractive.

Paid Program: Nail Maker Feeling the Pinch From Steel Tariffs

Nail Maker Feeling the Pinch From Steel Tariffs

partners.wsj.com

Mid Continent Nail Corp in Poplar Bluffs, Missouri, laid off 60 of its 500 workers on June 15, and the company plans to cut 200 more by the end of July because of the tariff.

On March 1, US President Donald Trump announced he would impose tariffs of 25 percent on imported steel and 10 percent on imported aluminum to save US jobs, effective June 1.

Mid Continent gets steel for its nails from parent company Deacero in Mexico. Deacero must pay the 25 percent tax for materials shipped to Mid Continent despite the steel being sent to its own company.

The last major nail supplier in the country says the tariff has caused a 50 percent drop in sales, an increase in its prices and has driven customers to buy cheaper nails elsewhere.

The company is in danger of shutting production by Labor Day unless the Commerce Department grants it an exclusion from paying the tariffs, company spokesman James Glassman told CNN on Tuesday. Mid Continent Nail is “on the brink of extinction,” he said.

If you are wondering, this is exactly what we were told would not happen. Companies here in the United States would become more competitive and corporations would move manufacturing to the United States because of the Tariffs. Suddenly it doesn't seem to be the case, as if we all didn't see that coming.

How long before Trump slaps Tariffs on media companies reporting this bad news to Americans?

I can't see how this move makes any sense at all unless the finished nails would be somehow exempt of tariffs upon import to the US.

In fact, assuming most of the companies' sales are in the US, it would have a negative effect on costs. The cost of the nails they would sell in the US would include the cost of the steel PLUS labor, packaging, shipping, commercial expenses, etc,. plus the margin they need. Then the tariffs would be applied to all of that, instead of just the cost of steel.

I note that the excerpt you posted did not confirm the thread title, i.e. it does not say they are considering relocation of finished nails manufacture. I didn't read the link, to be honest. But if they think they can improve their situations by offshoring their production they are completely wrong, and in fact a bit dumb. It would increase their total costs.

Don't get me wrong, I don't like tariffs. But this doesn't make sense, if we assume the thread title is accurate.

 

[Airyaman]

I can't see how this move makes any sense at all unless the finished nails would be somehow exempt of tariffs upon import to the US.

In fact, assuming most of the companies' sales are in the US, it would have a negative effect on costs. The cost of the nails they would sell in the US would include the cost of the steel PLUS labor, packaging, shipping, commercial expenses, etc,. plus the margin they need. Then the tariffs would be applied to all of that, instead of just the cost of steel.

I note that the excerpt you posted did not confirm the thread title, i.e. it does not say they are considering relocation of finished nails manufacture. I didn't read the link, to be honest. But if they think they can improve their situations by offshoring their production they are completely wrong, and in fact a bit dumb. It would increase their total costs.

Don't get me wrong, I don't like tariffs. But this doesn't make sense, if we assume the thread title is accurate.

Nails that are fully made in Mexico and shipped to the US would be considered a USMCA-compliant product and thus not subject to any tariffs.

 

[Lord Tammerlain]

Simple solution

Slap a 100,% tariff on imported nails

 

[vanceen]

Nails that are fully made in Mexico and shipped to the US would be considered a USMCA-compliant product and thus not subject to any tariffs.

Then why is steel made in Mexico causing a tariff problem?

EDIT: OK, got it. Steel is subject to 25%, even in USMCA. If nails are not, I was wrong in my conclusion above.

 

[Airyaman]

Then why is steel made in Mexico causing a tariff problem?

Because Trump has levied tariffs of 50% on all foreign steel.

 

[vanceen]

Because Trump has levied tariffs of 50% on all foreign steel.

Please see my edited comment above, as I think you replied before I made the edit.

The tariff is 25% for USMCA, but the point remains. You were correct, it was because I made an incorrect assumption.

EDIT: mistyped, it WAS because I made an incorrect assumption! I need to slow down a bit.

 

[vanceen]

Reading a bit more, I see the following:

Imports of steel and aluminum from all countries, including Canada and Mexico, are subject to a 25% tariff under Section 232 of the Trade Expansion Act. These tariffs also apply to certain derivative products based on their steel and aluminum content.

I suspect finished nails are not one of those "derivative products" subject to the tariff, or the company would not be considering offshoring.

 

[Airyaman]

Reading a bit more, I see the following:



I suspect finished nails are not one of those "derivative products" subject to the tariff, or the company would not be considering offshoring.

Yes, because the derivate product in this case would be steel rod, not the nails that are made from them. Most likely it is the steel rod that the company was buying that is subject to the steel tariffs.

But looking back at the OP, it appears that it is 25% tariff not 50%, so that suggests that steel rod is not a derivative product for this purpose, but a not USMCA compliant.

 

[vanceen]

Yes, because the derivate product in this case would be steel rod, not the nails that are made from them.

I thought we were talking about the scenario in which the finished nails are made in Mexico.

 

[Airyaman]

I thought we were talking about the scenario in which the finished nails are made in Mexico.

Yes. Who has said differently?

Steel makers turn their steel into steel rod. Steel rod is then made into nails.

 

[Airyaman]

Doh!

So there was no date on the article in the OP!

This is very old news indeed. I was wondering why percentages weren't adding up.

This was from 2018 when Trump had steel tariffs of 25%.

Trump's Tariffs Have Led to Layoffs at U.S. Manufacturers

The U.S. Chamber of Commerce argues that 2.6 million American jobs could be lost

fortune.com

America’s largest nail manufacturer, Mid-Continent Nail, became the first company to lay off
employees as a result of Trump’s tariffs in mid-June. The Missouri-based company made its nails
with steel imported from Mexico, but Trump’s 25% tax on steel dealt a blow to production. Sixty
employees lost their jobs, and the whole company—which employs 500—could be out of business
by Labor Day, said the Washington Post.

They later went on and secured exemptions in 2019.

Mid Continent Steel & Wire receives steel tariff exemption

Mid Continent Steel & Wire says they have been granted exemptions from President Trump's steel tariffs.

www.kfvs12.com

 

[Rumblefish]

You see, the customer, the one buying the Nails, doesn't want to pay more for the nails. If you can produce good quality at a reasonable price, then people will buy from you. If you produce good quality and a higher price, then the cheaper alternative suddenly becomes more attractive.

Paid Program: Nail Maker Feeling the Pinch From Steel Tariffs

Nail Maker Feeling the Pinch From Steel Tariffs

partners.wsj.com

Mid Continent Nail Corp in Poplar Bluffs, Missouri, laid off 60 of its 500 workers on June 15, and the company plans to cut 200 more by the end of July because of the tariff.

On March 1, US President Donald Trump announced he would impose tariffs of 25 percent on imported steel and 10 percent on imported aluminum to save US jobs, effective June 1.

Mid Continent gets steel for its nails from parent company Deacero in Mexico. Deacero must pay the 25 percent tax for materials shipped to Mid Continent despite the steel being sent to its own company.

The last major nail supplier in the country says the tariff has caused a 50 percent drop in sales, an increase in its prices and has driven customers to buy cheaper nails elsewhere.

The company is in danger of shutting production by Labor Day unless the Commerce Department grants it an exclusion from paying the tariffs, company spokesman James Glassman told CNN on Tuesday. Mid Continent Nail is “on the brink of extinction,” he said.

If you are wondering, this is exactly what we were told would not happen. Companies here in the United States would become more competitive and corporations would move manufacturing to the United States because of the Tariffs. Suddenly it doesn't seem to be the case, as if we all didn't see that coming.

How long before Trump slaps Tariffs on media companies reporting this bad news to Americans?

Just for the record, it’s Poplar Bluff … singular.

 

[vanceen]

Yes. Who has said differently?

Steel makers turn their steel into steel rod. Steel rod is then made into nails.

There seems to be some confusion here, but it's really beside the point. If imported steel is tariffed but finished nails are not, it might make sense to offshore production to Mexico.

 

[Helix]

If the Republicans crash the economy, we might need a lot fewer nails for a while. I'm hoping that we avoid the crash somehow, but that's what Republicans do.

 

[Airyaman]

There seems to be some confusion here, but it's really beside the point. If imported steel is tariffed but finished nails are not, it might make sense to offshore production to Mexico.

See post #14. All bets are off, this is actually a story from 2018 when Trump had 25% tariffs against foreign steel. So while some things may apply as I've shared, they don't apply to the nail company of the OP.

 

[humbolt]

We have no shortage of US nail manufacturers that use domestic steel to produce nails.