By Allan Leibowitz
As materials handling sellers from around the world assembled last month for the 2018 MODEX show in Atlanta, Georgia, the clock was ticking on the imposition of a 25% tariff on 1,300 types of Chinese imports, forklifts among them.

The tariffs are unlikely to come into effect until later this month at the earliest, with public submissions closing on May 11 and a hearing set for May 15.

The threat comes as Chinese imports continue to gain traction in North America, with many mainstream manufacturers augmenting their US-, Japanese- and European-built equipment offerings with cheaper Chinese products. And many dealers have added more economical Chinese lines to increase their ranges.

The application of a 25% impost would severely affect the value proposition of these cheaper imports and many fear it would indirectly push up prices across the board.

The topic was top of mind for many at MODEX, and a number of responses are already being considered.

While companies like Toyota are not directly affected by the forklift tariff, Brett Wood, president and CEO of Toyota Material Handling North America, opposed tariffs. "Even if my company would benefit from it, I would still say free and fair trade is what is needed for our industry," he says. Wood's real concern is a looming tariff on steel. Even though TMHU buys steel - and lots of it - in the US, Wood predicts that prices will go up. "So now you're penalising someone who already is loyal to the US . and that price increase will get passed on to the consumer."

MHI won't be lobbying on the tariff issues, according to CEO George W. Prest, who says the organisation doesn't take sides because it has members from 26 countries "and we have members on both sides of almost any issue that comes up".

However, Prest does concede that the proposed US tariffs have already impacted on steel prices and his personal view is that no economy has benefited from tariffs or protectionism. "They typically do the opposite."

Bill Pedriana, chief marketing officer for Big Joe, believes his company, a fully owned subsidiary of China's EP, may have some flexibility which competitors don't enjoy. Depending on the outcome, Big Joe also has the option of transferring some of its production to the US "to offset any tariffs".

But Pedriana is optimistic: "We don't think (the tariffs) are going to go through as proposed."

Ken Biediger, president, North America Forklift Division of LiuGong, says tariffs "certainly have my attention". However, he is not overly concerned, because his company has manufacturing bases in Poland, India and South America. "So, we have the ability and are putting in place plans to manufacture our equipment for the US market in these other factories."

Looking further down the line, Biediger says "as the only Chinese heavy equipment company manufacturing outside of China, it shows that we certainly have an appetite and a history of being able to put a factory wherever we want and we have already discussed opportunities in the US or Mexico for the North American market".

So, while he is conscious of the threat of tariffs, Biediger believes LiuGong is in a far better position to weather this than his competitors.

Noblelift would be hit hard by the measures as its entire product line is listed among the proposed tariff targets, according to Loren Swakow, managing director of Noblelift North America.

However, the Chinese company will be somewhat insulated as it has manufacturing facilities outside China, "Within three to four months, we could move production for the US market to Malaysia or India," he says.

Swakow's strategy is to prepare for the worst, "so I'm stocking up now, building inventory in Illinois . at the rate of a container a week". He estimates that they may need a three- or four-month supply if the tariffs come into effect.

For China's Hangcha, the tariff announcement came hot on the heels of the launch of its US subsidiary, HC Forklift America Corporation.

Group general manager Jason Wu says the company is taking a "long-term view" of the US market. He believes the establishment of an American subsidiary should help the company and is confident that American customers' interests will prevail and authorities will realise customers want choice.

The KION Group is among those which would be affected by tariffs, especially for its Baoli line imported from China. But Vincent Halma, KION North America president and CEO, says this type of challenge is nothing new for the global player. "There are always challenges, and we work with that on a daily basis. There's import duties if you import units into Europe and Japan, so this is not a new issue," he says. "We're just monitoring it."

TVH America's vice president, sales and marketing, Dirk von Holt, believes forklift parts could be affected by tariffs. He estimates that fewer than 20% of TVH parts for the American market are sourced from Asia, but admits to some "concern about what tariffs are going to do to the overall environment".

While Korea is not the subject of tariff threats, Hyundai's US marketing and strategic business manager, Paul Bilson, is monitoring the situation closely. "We're watching the market, we're watching interest rates, which potentially are more of a concern. If tariffs come in and prices go up, those interest rate moves may be held off a bit longer," he says.

The hope among materials handling suppliers is that the Trump administration will either back off from the imposition of tariffs, or at least water them down and delay them. Either way, the issue is weighing on the major players, especially the Chinese manufacturers, and contingency plans are either under consideration or already in the early stages of implementation. And those not directly affected are conscious of the potential impact on the broader market and the spin-offs onto other sectors. So all eyes remain on Washington until later this month, when some clarity may emerge.