The Impact of Tariffs

This commentary originally appeared in The Post Journal on Jul 22, 2018  

Last week, I drove by the Cummins Engine plant located on Baker Street near Ashville. The parking lot was jammed full with the cars of the employees who work there. It made me wonder whether the President’s new tariff policies could have any affect on this company which has made such a positive impact here in Chautauqua County. (Cummins also manufactures engines and engine parts in China.)

“This is a big headache. Making changes in your supply chain is not a three-week process.”

The answer, it seems, is “Yes.” In June the President of the Cummins distribution business was quoted in the Wall Street Journal as saying: “This is a big headache. Making changes in your supply chain is not a three-week process.” He was referring to a new American 25% tariff on imports from China which was to take effect on July 6th. The gist of the article was that at least in the short-term Cummins would have to pay the 25% tariff on some of its parts (or engines) coming into the United States.

The article also cited a profit warning from Daimler AG, a German company which makes Mercedes Benz cars in the United States. The implication of the Daimler statement is that tariffs would likely raise the price of SUV’s being produced at their plant in Alabama.

Until the election of the Trump administration, the Republican Party had been known as the pro-business, free-trade party. Now, it is becoming the party of protectionism and tariffs.

There is no doubt that there have been inequities in some international trade policies which needed to be corrected. The traditional way of dealing with them was through international trade organizations. Now America is going its own way in the belief that unilateral action is the best strategy.

Will it work? The business world is now so interconnected that, at a minimum, this new policy will likely cause problems in some sectors of the economy. The usual advocates for business like the Chamber of Commerce and National Association of Manufacturers have come out against it.

When you look at the Southern Tier of New York State it is hard to put a positive “spin” on this new direction. 

When you look at the Southern Tier of New York State it is hard to put a positive “spin” on this new direction. The tariff on steel and aluminum may help those particular industries, but what about the many metal manufacturing companies in our region who purchase and then fabricate from these metals? In Jamestown we also have SKF Corporation, a Swedish-based international company that makes bearings. Will tariffs on raw materials affect them? Some of the tariffs are directed toward our European allies.

So far, the core of the Republican Party has stuck with the President, but that support could dwindle if this new protectionism doesn’t work. The stock market has held up surprisingly well. Yet, one of the axioms in the investment world is that uncertainty is not good for the markets. If corporate earnings begin to fall and unemployment numbers rise, there could be a correction.

One thing for sure is that it is certainly interesting to watch this change in the direction of American foreign and economic policy. We will just have to wait and see how it all plays out.


Rolland Kidder
Stow, NY

‘Say A Prayer’ for the Dunkirk NRG Power Plant

This originally appeared in The Post Journal  on Jul 8, 2018  


You might want to “say a prayer” for the Dunkirk NRG Plant because things are looking pretty bleak as to its reopening.

                 The sun is setting on the NRG power plant in Dunkirk.              photo credit

We all remember the December 2013 “Christmas miracle” event in Dunkirk when the Governor, surrounded by plant workers and elected officials, came to town and promised that the plant would reopen. It is now halfway through 2018, we are looking at another gubernatorial election and we are still waiting. 

The governor’s action in 2013 pre-empted the State’s own regulatory agencies. The Public Service Commission, the DEC and other state agencies usually “weigh-in” before such executive actions are announced. When state agencies subsequently began to implement the Governor’s decision, Entergy, a competing large electricity producer in the State, brought a lawsuit alleging that New York had “jumped the gun” and that such a repowering decision was under the jurisdiction of the federal government.

Throughout this whole process, we didn’t hear a lot from NRG. It is a big company home-based in Houston and owns 47,000 megawatts of electrical generating capacity in the country. The Dunkirk plant only generated 435 megawatts. It seems probable that such a small plant, under a legal cloud located in a state known for its anti-energy bias … probably was not on the front-burner at NRG. No notice was given to the State within three years that the company intended to restart the plant, and now the New York State Independent System Operator (which coordinates the grid much like the old New York Power Pool,) says that new costs will likely be placed on NRG if it repowers and reopens the plant.

Of course, during the five years we have been waiting for the Dunkirk Power Plant to reopen, things have changed dramatically on the grid. Millions of dollars have been spent to improve the efficiency of electrical transmission lines and substations thus reducing the number of required generating plants. Interconnections with Pennsylvania and other states have been or are being strengthened so that electricity can more easily flow across state lines. So, the delay on repowering has likely reduced Dunkirk’s chances for reopening the power plant. In addition, the governor has become involved in denying permits for new natural gas pipelines which could also kill any repowering efforts. 

I remain in favor of repowering the Dunkirk plant and believe that its conversion to natural gas would be a net gain for the environment.

I remain in favor of repowering the Dunkirk plant and believe that its conversion to natural gas would be a net gain for the environment. Natural gas is much cleaner than coal, and natural gas generation is needed to back up the renewable (yet interruptible) generation now coming online from wind and solar. I also believe that reliability on the grid is better if you are situated closer to the generation creating the electricity that feeds your house.

However, the future of the Dunkirk generating plant is now under a dark cloud. It may well turn out to be another example of being stuck out here at the western terminus of a big urban state like New York where what may be a priority for you, is not the priority of the powers that be in Albany or Houston.


Rolland Kidder 
Stow, NY