Schweitzer Engineering Laboratories founder says tariff on Mexican imports may launch trade war

The founder of Schweitzer Engineering Laboratories is worried that a proposed 20 percent tariff on all Mexican imports to the United States may trigger a trade war. The national electricity utility of Mexico is SEL’s largest or second-largest customer, depending on the year, said Edmund O. Schweitzer III.

SEL, which produces high-tech equipment for electrical transmission and distribution, measures its annual business with Mexico in the millions of dollars, Schweitzer said.

Digital relays made in Pullman and Lewiston are shipped to an SEL plant in San Luis Potosi, Mexico, where about 700 people work. The parts are installed in control and protection panels sold to the Mexican utility and other customers, including some in the United States.

A week ago, President Donald Trump’s press secretary, Sean Spicer, told reporters that Trump is considering a 20 percent tariff on all goods shipped from Mexico to the U.S. to pay for a security wall along the United States’ border with Mexico.

“A border tax war could lead to loss of jobs in the U.S. and Mexico,” according to an opinion piece Schweitzer submitted to the Tribune.

It’s too early to quantify what impact that could have on SEL, said Schweitzer, whose business is the largest company in the region and employs 2,633 people in Lewiston and Pullman.

“If it did happen, we will find a way to persevere just as we did when the government has made other mistakes and when there’s (been) other challenges,” Schweitzer said. “We’re good at problem-solving. I just don’t want my government to give me a great big unnecessary problem I have to go solve.”

Since the tariff idea was announced, Schweitzer has sent letters to members of Congress, including the delegations from Washington and Idaho, as well as to the U.S. Chamber of Commerce and the National Association of Manufacturers.

He’s also talked with approximately 30 CEOs and chief financial officers of companies, none of whom believe the proposal will be imposed, Schweitzer said.

“People like you and me … will cause politicians to sit up and take notice and not do something as foolish as starting a trade war with two countries who are bound at the hip.”

There are numerous problems the 20 percent tax could create, Schweitzer said. Right now, goods are generally traded between Mexico and the United States without being taxed when they cross the border.

Mexico might respond to a 20 percent tax on its imports to the United States by imposing a similar tax, something that could make American products more expensive than those of foreign competitors in Mexico.

“After all the years we’ve worked to build a strong and bilateral business with Mexico and the United States, I feel my own country would be seriously hindering these successful endeavors,” according to Schweitzer’s opinion piece.

The logistics of such a tax could be complicated, Schweitzer said.

SEL, for example, would have to do time-consuming calculations to figure out which products the tax applied to when its American-made digital relays that were shipped to Mexico to be installed in control and protection panels were imported back into the United States, Schweitzer said.

“That’s waste.”

A trade war might lead to other actions that would make business more cumbersome, Schweitzer said. Americans need passports to travel to Mexico, not visas, which are a more complicated document to obtain.

Mexicans, however, are required to have visas to enter the United States, which makes it tougher for SEL when its Mexican employees travel to Pullman for meetings or training, Schweitzer said.

It would be better if Mexicans could travel to the United States on a passport, Schweitzer said, but Mexico might impose tougher travel requirements as part of a trade war.

Ultimately, no one would win, Schweitzer said.

“Trade brings us all together. We need each other.”