Tariff Impact Hits Home in Key House Race in Boeing Country
Posted May 3, 2018 7:13 p.m. EDT
AUBURN, Wash. — President Donald Trump likes to keep negotiating partners on their toes. But workers like Charles Cesmat have been just as unnerved by the president’s recent moves on trade.
Cesmat is a parts manager at a Boeing plant in Renton, just south of Seattle. One of every four planes Boeing assembles is sent to China. Each time Trump attacks Beijing on Twitter, or announces a new set of tariffs, Cesmat winces.
“I’m concerned a potential trade war could affect work for our members and work for me,” Cesmat said. “Thousands of people’s jobs rely on a working relationship with China.”
Nowhere is that truer than in Washington, which sent $18 billion in goods to China last year, more than any other state. A congressional race here has a become crucial test of whether Trump’s upending of the norms of international trade will come at the expense of Republican candidates.
The spat with Beijing has rattled the state’s juggernaut aerospace industry, as workers and business owners reckon with the possibility that their livelihood could be at risk. Boeing shares economic dominance with giants like Amazon and Microsoft, but trade still supports 40 percent of all jobs in Washington, according to a Seattle consulting firm.
“Trade issues are high on people’s minds,” said Chris Mefford, president of Community Attributes Inc., the firm that produced the estimate. “They are wondering and worrying how it’s going to play out.”
That anxiety is particularly acute in the 8th Congressional District, a comma-shaped expanse that will hold one of the most closely watched midterm races in November as the Democrats battle to win back the House. Several political handicappers rate the race as a tossup.
The district’s quirky boundary, which encompasses the vast airplane-making ecosystem to the west and thousands of acres of cherry and apple farms on the other side of the Cascade Mountains, makes the territory uniquely vulnerable to the president’s actions on trade. Boeing is probably the U.S. company with the most riding on a healthy relationship with Beijing.
China is projected to buy more than 7,000 planes worth almost $1 trillion in the next 20 years, more than Boeing’s current backlog for the entire world. Most commercial aircraft in China are made by Boeing, the company says, but if the trade pressures escalate, China could choose to award more work to Europe’s Airbus.
For now, Beijing has threatened to retaliate with tariffs on some airplanes, including older 737 models made in the Renton factory where Cesmat works, which is just outside the district.
“China knew exactly where to target,” said Kim Schrier, the Democratic candidate who has built the biggest campaign war chest ahead of the Aug. 7 primary. “They’re targeting districts where this could be problematic for Republicans.”
Schrier is among half a dozen or so Democrats gunning for a seat that became catnip for the party the moment that the seven-term Republican incumbent, Dave Reichert, announced his retirement in September. Despite Reichert’s success, the district favored Hillary Clinton by 3 percentage points over Trump, and it went twice for Barack Obama. Schrier, a pediatrician and first-time candidate, has been hammering Dino Rossi, the likely Republican nominee, on the tariff issue.
“These tariffs are a direct response to the policies of a president you helped elect. Don’t you have anything to say?” she tweeted to Rossi last month.
Rossi, a former state senator, is careful to note that the bluster could be part of Trump’s negotiating style. But he said he understood why everyone was so worried. “You really can’t get down to a trade war. In the end it will be very disruptive,” he said in an interview. “Hopefully this is more posturing than anything.”
But voters in the district say the escalating trade drama has already begun to complicate their daily lives. Companies that supply construction materials have suspended orders, waiting to see what happens to metal prices. Employees at a builder of truck components say managers have been hastily reassessing supply chains that run through China and Mexico. A local hard-cider brewer is reconsidering an expansion after the steel and aluminum tariffs made new tanks and cans more expensive.
And at Boeing, a company that employs grandfathers next to granddaughters and has introduced generations of Washingtonians to their spouses, the unease has been evident from the executive suite to the factory floor.
Trump’s hard line on trade didn’t used to inspire so much teeth-grinding among Boeing workers. A lot of union mechanics were happy last year when he pulled out of the Trans-Pacific Partnership, which would have reinforced the nation’s embrace of free trade. And the president earned a lot of fans in Washington when he criticized the company on the campaign trail in 2015 for setting up a new plant outside Shanghai, saying it would “end up taking a tremendous number of jobs away from the United States.” Jim McKenzie remembered that comment when, several months ago, he came across a package of dorsal-fin parts at the Boeing plant in Auburn where he works. McKenzie, a union machinery repairman with teal eyes, pulled back the Bubble Wrap and saw a label that made him feel as if he were sinking into quicksand: Boeing China.
“We drill it and assemble it, but they ship the parts in from China,” McKenzie said. “There are people who have worked here for 25 years making those parts, and they’re proud of that.”
But McKenzie, 56, isn’t eager to blow up the Beijing relationship. “China will just buy all their planes from Airbus,” he said, leaning his chair back against a wall in the machinists’ union hall in Auburn.
He doesn’t have much hope that Trump will do anything to stop Boeing from setting up shop in China — he saw how Carrier shipped work from Indianapolis to Mexico even though the president had railed against the move. In Boeing’s case, McKenzie said, hiring some Chinese workers might be unavoidable. “You have to provide them jobs to sell them airplanes,” he said.
Schrier recently won the endorsement of the machinists union, which represents more than 26,000 Boeing workers. Cesmat, 27, plans to volunteer for her campaign. “She pledged to support our jobs,” he said.
Boeing’s super PAC donated $2,000 to Reichert’s campaign, but hasn’t contributed to any candidates vying to succeed him, according to the Center for Responsive Politics, a nonpartisan research group. It did donate $8,000 to Cathy McMorris Rodgers, who is facing a strong Democratic challenge in her quest for re-election in Washington’s 5th District. The fear over trade tensions has spread beyond Boeing’s hulking factories, all the way to Schilling Cider, a hard-cider company founded here five years ago by two friends, Mark Kornei and Colin Schilling. The business grew quickly, thanks in part to the state’s abundant apple orchards, but now it’s staring down an uncomfortable new reality.
The company that sells Kornei stainless-steel tanks told him recently that prices for their raw materials might rise by 20 percent. A single tank costs around $50,000. He has also heard from the manufacturer of his aluminum cans that prices could increase by 10 percent. Kornei will buy 11 million of them this year, so that uptick alone could cost him more than $100,000, he said.
“Stirring the pot unnecessarily doesn’t help business whatsoever,” Kornei said. “Give us a steady set of rules so we can figure out what we are going to do.”
Rossi acknowledged that some of what the president says and does “can at times” make it harder for him on the campaign trail. But he has raised more than $2 million, about twice as much as Schrier.
The Republican tax cuts are a big selling point for Rossi, who has a ready figure for exactly how much a typical household will save because of the law (“$3,357 — that’s real money”). He’s also counting on a personal bond with Republican voters east of the Cascades.
“I have a connection with folks that certainly precedes the president,” Rossi said. He was referring to his campaigns for the governorship in 2004 and 2008, the first of which he lost by fewer than 200 votes in a third recount. “They know I’ll advocate for trade,” he said. “They know me.”