The letter from Canada brought unwelcome news.
ArcelorMittal, a steel manufacturer, announced it was hiking the price of steel it sells to Riverdale Mills Corp. of Northbridge by 25 percent starting June 1 to cover the cost of a new U.S. tariff.
“As a result of this situation and in accordance with the contractual terms we have with your organization, ArcelorMittal Long Products Canada is implementing an automatic transfer of these imposed duties on the product(s) provided to you by our company,” the business wrote.
For Riverdale Mills, a privately held company that welds steel into mesh for everything from lobster traps to fencing, the impact was immediate. One order of steel from a different Canadian supplier went up in cost by $54,000 the first week of the new tariffs. Riverdale Mills President and Chief Executive James M. Knott Jr. described the impact of tariffs on his company as crippling.
“In our business, the steel is a large portion of the cost of goods sold, so almost 65 percent of the cost of goods sold is steel,” Mr. Knott said. “So if we have a tariff of 25 percent on the steel, then it makes it very difficult.”
Across Massachusetts, the same issue is playing out at select companies, albeit to different degrees, thanks to an evolving trade spat with the nation’s trading partners.
In May, President Trump announced the United States would slap a new tariff of 25 percent on $50 billion of imports from China starting July 6. The president described the measure as a counter to unfair Chinese trade and technology practices.
Tariffs are essentially taxes that make it more costly to buy foreign goods.
Mr. Trump followed that by taking aim at Canada, Mexico and members of the European Union by slapping tariffs on steel and aluminum from those nations.
In response, China announced its own tariffs on U.S. goods. Canada, Mexico and the European Union did, as well.
Last week, Mr. Trump directed his administration to look for additional Chinese products to hit with tariffs. That could bring U.S. tariffs on Chinese goods as high as $450 billion.
Massachusetts exports totaled $27.6 billion during 2017, and imports totaled $34.5 billion, according to U.S. Census figures.
Gold was the top export category, followed by medical instruments, machinery to make semiconductors, electronic processors, controllers and integrated circuits and medical disposables such as needles and catheters. Aircraft engines and parts, radar parts and medical diagnostic materials were big exports, too.
Top imports included substances used in medical treatments, artificial body joints, integrated circuits, gold and medical instruments.
The state’s biggest trading partners, for both exports and imports, were nations targeted by the president’s tariffs: Canada, Mexico and China.
The imposition of foreign tariffs on products sold abroad might not have a large impact on the Massachusetts economy, said Robert A. Nakosteen, professor of economics at the University of Massachusetts at Amherst. That’s because exports represented only 5 percent of the state’s economic activity.
Yet the impact could be big for certain companies, especially when it comes to “supply chains,” according to Mr. Nakosteen. Supply chains are the network of suppliers that businesses use to obtain what they need.
“At some point if there is a trade war and it ends up being long lasting, companies should have to consider whether to bring their supply chains into the borders of the United States, and I think that could be painful,” he said.
Supply chain woes can play out in surprising ways. Polar Beverages of Worcester is seeing the price of aluminum cans go up, partly because of tariffs, said Christopher J. Crowley, executive vice president.
The privately held manufacturer of flavored seltzers, ginger beer and other drinks uses about 1.5 billion aluminum cans a year. Some of those canned beverages are made under private labels, he said, and it can be difficult to pass on price hikes to those customers, including supermarkets.
“We empathize with them, but you can’t lose money,” Mr. Crowley said. “You think of the investments we’ve made around here. (About $18 million for a new canning line this year.) We need to continue to grow to support our customer base.”
A Sudbury grower of flowers recently learned that the 2-acre greenhouse it was preparing to build would cost an additional $3,000 because of tariffs on imported metal, said Doug Gillespie, executive director of the Massachusetts Farm Bureau, which is based in Marlboro.
“Farmers are concerned that markets are going to change, and we operate on such a thin margin in agriculture in general, that the market volatility is what’s concerning to farmers, in general,” Mr. Gillespie said.
For the state’s medical device industry, which exports about $5.7 billion in products annually, off-shore suppliers often produce components in large quantities and ship them to Massachusetts for final assembly into products, according to Thomas J. Sommer, president of the Massachusetts Medical Device Industry Council. Some medical device manufacturers in Massachusetts have turned to Chinese suppliers because of lower costs, he said.
“It’s a very complex economic structure that has been built up worldwide, and this is a global industry,” Mr. Sommer said.
Jolts to commodities can also have unintended consequences, prodding domestic suppliers to raise prices to capture more profit from U.S. companies suddenly facing higher bills for imports.
“The announcement of the steel and aluminum tariffs led to a quick rise in prices, so there’s an anticipatory effect as well,” said Sara L. Johnson, executive director, global economics, for IHS Markit Economics, an international financial services and research firm. “The impact can occur very rapidly.”
Mr. Knott of Riverdale Mills in Northbridge said his company is absorbing the cost of higher-priced steel imports for now. Finding competitively priced steel made in the United States is not an option, he said, and U.S. steelmakers lack the capacity to pick up the slack for imports.
“We’ll have to forfeit profits, forfeit investments until the tariffs go away, and I don’t think the tariffs are sustainable,” Mr. Knott said.
Riverdale Mills employs almost 200 workers and exports about 35 percent to 45 percent of what it produces. Its big markets include Canada, Mexico, Latin America and the European Union.
Mr. Knott thinks his customers may be getting nervous about how tariffs might impact what they pay.
“That’s dangerous in itself, because people will say, ‘If they’re going to raise their prices sometime soon, maybe I should place orders in Europe for competitive material or place orders with the Chinese for competitive material, just to hedge my bet, to make sure I’m safe in case they raise their prices’ ” he said.