Section 232 of the Trade Expansion Act of 1962 allows the U.S. government to impose tariffs on imports if they are deemed to threaten national security.
In 2018, the Trump Administration enacted Section 232 tariffs on steel and aluminum imports. While the stated goal was to protect U.S. steel and aluminum producers, these tariffs also extended to specialized equipment that relies heavily on steel, including mobile cranes.
Since less than 3% of all-terrain mobile cranes are manufactured in the United States, with the majority produced in Germany and Japan, the tariffs have placed significant pressure on the crane industry. High-tensile steel required for crane manufacturing is not produced domestically, which further complicates the issue. As a result, the industry has argued that these tariffs do not strengthen U.S. production, but instead risk undermining critical infrastructure development, domestic job creation, and overall economic competitiveness.
Below is a letter recently sent to President Trump, underscoring the real-world impact of Section 232 tariffs on the crane industry:
Dear Mr. President,
Thank you for taking the time to read this letter and to consider our strong concerns about the §232 steel tariff on mobile cranes. I am writing as a long-term CEO in the crane service industry. At my former company, my team and I grew TNT Crane & Rigging from $30 million to over $500 million in revenues and into one of the top five largest crane companies in North America. I have formed a new company this year, LiftHigh Crane & Rigging. Our company is committed to supporting critical construction, infrastructure, and energy projects. We have a tremendous team with collective industry management experience spanning over 100 years. As part of our endeavor to be an industry leader, we are pro-American production and fully support fair trade. However, as outlined below, §232 steel tariff on mobile cranes does NOT advance either of these objectives, is currently inflicting significant pain on crane companies, and in fact will have potentially dire consequences on both the crane industry and the U.S. economy as a whole.
All-terrain (AT) cranes are required for capital and maintenance work on foundational infrastructure (e.g. bridge beams, hospitals, schools and apartments) as well as other commercial and industrial facilities that are critical to our economy such as power plants, refineries, petrochemical plants, cell towers, LNG plants, data centers and chip plants. With less than 3% of global AT cranes manufactured in the U.S., imports from Germany and Japan are not just necessary, but vital to support the demand for these highly specialized pieces of equipment. Further, the high-tensile steel required for AT cranes is not even manufactured in the U.S. and therefore, § 232 imposition of a tariff on steel required for the manufacture of mobile cranes does not progress any buy-American or trade balancing objectives.
My experience, along with discussions with many of my industry peers and colleagues indicate §232 will have the following unintended and highly detrimental consequences. To be clear, the crane business is virtually unanimous in feeling significant current pain and the only people saying the tariff is a good thing are those that buy Chinese (see related point below):
1. Shutdown of imports – Imports of cranes to the U.S. are basically shutdown because §232 tariffs make the cranes simply unaffordable.
2. Project delays/cancellation –
- Revenue projects relying on those cranes are being delayed or cancelled and the crane operators and supporting crew that would have worked on those projects are not being hired.
- Delays would subject projects to liquidated damages and other penalties, while impairing the timely support of customer ongoing maintenance and facility operations.
3. Inflation –Each of the factors noted above directly inflates project costs and timelines. Projects that are not delayed or cancelled must compete for limited crane availability, driving prices and overall project costs higher. Inflation is the unavoidable result. The crane market was already constrained by large-scale infrastructure build-out projects such as chip plants and data centers, and the lack of new equipment entering the country is now placing tremendous upward pressure on the domestic used-equipment market. For example, we were recently offered a 7-year old, 200-ton, 2018 crane for a price more than what a brand-new crane would have been a few months ago.
4. Conflict with critical infrastructure and domestic manufacturing goals – The expressed goals of a great American infrastructure build-out and an American manufacturing renaissance inherently rely heavily on cranes. However, the imposition of §232 and other tariffs literally take away the tools to achieve those goals, substantially delay completion and/or make them vastly more expensive. Additionally, despite thinking that the tariffs are simply a short-term impact, it is definitely a long-term disruption that will negatively impact the goals stated here for many years.
5. Critical supply chain disruption – With crane imports shutdown, foreign manufacturers who schedule crane production for global demand, will allocate less production for U.S. sales. In fact, currently Liebherr and Tadano the two largest manufacturers, are not sending any cranes to the U.S. that we are aware of. Current inventory otherwise meant for the U.S. will be redirected to other markets around the world. Together, this will create a literal gap in supply chain to the U.S. for both short-term and long-term horizons.
6. Chinese benefit and gain ground –U.S. companies under pressure to maintain projects and keep their businesses running will be forced to purchase cranes manufactured in China which will result in further aggravation of the trade imbalance with China. Chinese cranes were previously available at a 50% discount to models from competing manufacturers, but due to the safety and quality concerns were not gaining a large amount of market share. We are seeing that sentiment change very rapidly as our industry does not feel they have a choice.
7. Safety suffers and injuries and/or casualties result –
- Significant amounts of new cranes supply the U.S. market annually. Aging U.S. crane equipment, without the affordable option to replace with new equipment, will result in safety issues that cause injuries.
- Chinese cranes gaining ground in the U.S. will allow their long-documented safety issues to surface and inevitably cause injuries and/or casualties.
The negative impact of §232 tariff on the crane industry is real and personal. My company has had to cancel orders on four cranes because the cost of those cranes at conservatively $12.5mm would turn into $17.5mm assuming that 80% of the cranes are steel and a 50% tariff. We had jobs and people ready to be hired that relied on those cranes and now we are in limbo. We are scrambling to find assets, and they are either unavailable or have prices that have gone up substantially. This is a loss of jobs which affect hard working American families.
I respectfully urge your Administration to reconsider the application of Section 232 tariffs on mobile cranes and related equipment. Exempting these tariffs on this specialized equipment would not only prevent small businesses like mine from losing critical opportunities, but also strengthen our ability to serve domestic projects, create jobs, and contribute to the U.S. economy.
Thank you for your leadership and for consideration of this appeal. I would welcome the opportunity to provide further details on how these tariffs directly affect my company, my employees, and the communities we serve. We can also discuss the impact on the industry overall. I am happy to come to Washington even for a 15-minute meeting. If you can accommodate a 15-minute meeting, then I can personally guarantee you will have at least 5 leaders from our industry (manufacturers, distributors, trade associations and owners) in that meeting to provide a better understanding that leads to better outcomes for all of us.
Respectfully,
Mike Appling Jr.
Owner and CEO
LiftHigh Crane & Rigging, LLC
