Minnesota factories see orders tank on continued trade uncertainty

President Donald Trump said his tariff policy is expected to drive more business to U.S. manufacturing plants.

But many Minnesota factory heads have yet to see it, and instead are juggling budgets as orders dry up while their own costs continue to rise.

“The tariffs have just caused us havoc. Complete and utter havoc,” said Dave Wedge, who manages Minnesota Twist Drill’s Chisholm and Hibbing drill bit factories.

Trump’s latest tariff increases went into effect Wednesday as levies on steel and aluminum imports went from 25% to 50%.

Todd Olson , co-owner of Twin Cities Die Castings in Minneapolis, said the tariff increases create another round of the uncertainty that has plagued his metal parts components factory since Trump’s trade war began.

In the past few months, supply costs surged while sales flattened. His aerospace and ag component orders have slowed. And his car-making customers are once again putting off redesigning vehicle models because of the metal tariffs, Olson said.

“It’s like oil,” he said. “Just the uncertainty of this world market with the tariffs has raised prices.”

Over the past few months, he froze hiring and terminated 10 contract workers. The company also had to increase prices twice in the last 90 days, even though the thousands of tons of aluminum and magnesium he buys are all domestically sourced.

On Friday, the U.S. Labor Department released monthly jobs data that showed a slowing in hiring nationwide.

With Trump’s frequently changing tariff policies, customers are constantly calling to learn Twin Cities Die Castings’ latest prices.

“We’ve got an absolute glut of request for quotations. But nobody, nobody’s doing anything. It’s just been in a total holding pattern,” Olson said. “Nobody’s making any decisions until they can kind of see the mid- to long-term path. And that’s pretty consistent across not only in our industry, but for other CEOs I talked to.”

At Twist Drill, Wedge said he expects sales to be flat for the year if he’s lucky.

So the company was suddenly shelling out tens of thousands of dollars in unexpected trade taxes after Trump raised tariffs on Chinese goods. Worse, the tariffs kept changing.

Twist Drill then had to spend more money because of new retaliatory tariffs stemming from Trump’s trade war with Canada. Twist Drill ships most of its finished machined drill bits from Chisholm to its parent company in Canada.

Now, Wedge needs to factor in the doubling of steel and aluminum tariffs.

“This is having a negative effect on us,” Wedge said. “It’s just not a good situation. And I never imagined this. I figured, you know, they’d throw these tariffs out, and there would be some back and forth, and then it would be over. But everybody’s really sticking to their guns.”

In two months, the company increased prices twice. It is cutting costs, putting off new supply orders and considering opening its machining shop to third-party customers, Wedge said. That would bring in revenue not subject to tariffs.

“I’m hoping that we can still make our budgeted sales. But of course, you know, our profits will be less,” Wedge said. “Right now it’s all so volatile. ... We can’t plan anything, which is the frustrating part.”

Trump believes the tariffs, especially the aluminum and steel levies, will bring business back to U.S. companies. He also has said it is for national security reasons.

So far, economic data has not shown definitively whether the policies have worked. The trade deficit fell 16.3% from March to April, the biggest month-to-month decrease on record, the government said Thursday. But much of that plunge was from companies stocking up in the early months of the year before tariffs increased, economists said. They also pointed to the fact that any change of that magnitude means a reduction in economic activity.

The Fed’s latest Beige Book report Wednesday also indicated economic activity has declined in recent weeks.

Another report this week, from the Federal Reserve Bank of Atlanta, said its research shows that half of tariff expenses will be passed to customers. That’s less than when Trump raised tariffs in his first term.

Many on the Iron Range, though, support the higher steel and aluminum tariffs, even as they acknowledge the volatile nature of the results of Trump’s policies.

“It’s a complex issue and we recognize that at the IMA because of the various ways tariffs impact our vast membership,” said Kristen Vake, executive director of the Iron Mining Association of Minnesotac, in an email.

“The big picture [is] we need fair trade,” she said. “In order for the iron mining [and taconite] industry to continue thriving, we need a healthy domestic steel market.”

Still, not everyone is convinced 50% steel and aluminum tariffs or steeply higher levies on China are the way to go.

In Congress, U.S. Rep. Kelly Morrison, the DFLer who represents west and northwest Twin Cities suburbs, said she worries the tariffs will hurt small companies.