Tariff Impacts in America’s Heartland

For more than 115 years, Draper, Inc. has been manufacturing window shade products from its corporate headquarters in Spiceland, Indiana – a town of 800 people located 40 miles east of Indianapolis. Over the years, Draper’s product lines and corporate footprint have expanded to include offices in California and the U.K.
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Today, Draper’s workforce of 700 manufactures a wide-ranging product portfolio of projection screens and rear projection display systems, custom commercial window shades and gymnasium equipment to include basketball backstops, wall pads, volleyball equipment, batting cages and wrestling mat hoists.

Over the past several months, U.S. imposed tariffs on products and components imported from China have had a direct impact on the day-to-day operations of Draper. The Draper business is driven by new construction, which requires the company to provide price quotes during the building bid stage and guarantee product prices for up to a year.

Any rise in product component prices after the bid is introduced is a direct hit to Draper’s profits. As a result, increased costs due to tariffs will have an impact on the company’s operations for up to a year.

Thus far, tariffs on many of the small manufactured components Draper buys from China have raised prices by 10 percent. In anticipation of additional tariff jumps to 25 percent, Draper ordered eight containers’ worth of small manufactured components, which arrived by Dec. 31 – in time to beat the tariff rise that had been set for Jan. 1 (though now delayed as President Trump and Chinese President Xi Jinping continue to work toward a deal).

A further increase of tariffs to 25 percent will pose additional challenges to Draper, forcing the company to consider alternative sources of production and components, distracting the company from focus on its customers and providing instability and uncertainty to its supply chain.

Additionally, since September 2017, prices for steel Draper purchases have increased 26 percent, while the prices for aluminum have increased 31 percent, due to the Administration’s tariffs on steel and aluminum imports. The increased costs are being passed on to new customers, but Draper must honor prices quoted before the tariffs were imposed – continuing to pinch profit margins for the next five to six months.

“U.S. companies like ours want a level playing field when doing business internationally, but tariffs are hurting American companies and consumers,” said Nate LaMar, Draper’s international regional manager. “We ask the Administration to reach an agreement with China soon and remove the tariffs.”

CompTIA, which advocates for the $1.5 trillion U.S. information technology ecosystem, has been at the forefront of the advocacy efforts to protect American companies including ones such as Draper. The fact is these tariffs on tech affect all sorts of businesses across the United States.

CompTIA, through direct meetings with government officials and providing detailed input to the U.S. Trade Representative, is asking U.S. and Chinese officials to come together and achieve permanent outcomes that will provide companies with certainty on a wide variety of issues to include intellectual property protection, cybersecurity, market access and cross-border data flows.

The current trade war with China has only hurt American consumers and companies – from window manufacturers in the Heartland to tech companies in Silicon Valley.

CompTIA’s International Policy & Regulatory Compliance (IPRC) program is leading efforts in Washington and abroad to ensure American companies are treated fairly in all trade deals.

For more information about the IPRC program and other work CompTIA is doing, visit our website.

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