Columbus is home to many companies that export their goods. Its mayor wants the trade war to end. "The uncertainty hurts." By Joe Light

If there is one group of people in America tariffs are most meant to help, it is the 50,000-odd residents of the Midwest manufacturing mecca that is Columbus, Ind. And yet, two days after President Donald Trump launched his latest round of import taxes in early April, the city's mayor had a message for anyone in Washington who might listen: Please, make it stop.

Set between Indianapolis, Cincinnati, and Louisville, Ky., Columbus has about 40% of its workforce employed in manufacturing-related jobs. Nearly 30% of its gross domestic product is tied to exports. It is the headquarters of Cummins, the $46 billion maker of diesel engines and other power equipment, and scores of smaller manufacturers that sell American parts around the world.

In other words, Columbus and cities like it are exactly where you would expect to see the economic boost the administration says tariffs will deliver. Instead, the first month of Trump's global trade war has whipsawed Columbus. Manufacturers and local officials say they are worried about layoffs, rising costs, and lost economic development projects as companies wait for the dust to settle.

That remains true even after the China trade deal the White House announced Monday. Despite the reprieve, trade levies are still far higher than many economists' worst-case scenarios before Trump took office.

"With current tariffs in place, we believe our region will see many adverse effects, which will take years to recover from," wrote Columbus Mayor Mary Ferdon to Rep. Jefferson Shreve (R., Ind.) and Sens. Todd Young (R., Ind.) and Jim Banks (R., Ind.).

Columbus is getting squeezed on all sides by the trade war. Many goods made here require parts from abroad. Trump's tariffs are making those imports more expensive, putting pressure on local manufacturers' bottom lines. Meanwhile, those businesses' export markets are at risk from retaliatory tariffs. And no one seems to know quite how to plan for tariffs that rise and fall from week to week.

The area's economy, with its close ties to the auto industry, has long been volatile. The situation now isn't as dire as the 2007-09 recession or the Covid-19 shock, but locals are worried.

"I see storm clouds," says Cindy Frey, president of the Columbus Area Chamber of Commerce.

The Cummins engine plant south of downtown shuttered for a week in March, a decision that plant manager Nikki Wheeldon attributed in part to the tariff threat. The plant is expecting a spurt of new business over the summer as it ramps up production on a new engine, leading her to ask some of her 1,000 employees to work weekends, but that hasn't quieted worries.

"They'll make more money -- that's good in the short term. Their questions are, 'Should I spend that? Should I save that?' " Wheeldon says. "They're not sure how to behave. There's just a lot of anxiety that comes with that."

Wheeldon's plant sources most of its parts domestically, but relies on Chinese manufacturers for engine blocks, among other components.

Despite the mayor's request for relief, Columbus' federal representatives remain largely supportive of Trump's trade crackdown -- like most Republicans. Shreve, the congressman, sent Barron's a statement saying he has met with local leaders. "There's heightened uncertainty," he said, adding he's supportive of the administration's trade policy. Young, a senator, said tariffs are useful but "carry downside risk if applied without a clear strategy" and said he wanted more clarity. Banks didn't respond to a request for comment.

Ferdon sent her email just after "Liberation Day," when Trump announced a 10% baseline tariff on all imports and higher "reciprocal" tariffs on most major U.S. trading partners.

She couldn't imagine the roller coaster of tariff announcements and reprieves that has come since.

Trump has launched a vast trade war against virtually the entire world, only to rescind it partway, while still insisting he has the right to plunge back in. As of a few days after Ferdon's letter in early April, Trump had imposed 10% tariffs on virtually every country. His new China tariffs shot up to 145%, only to fall to 30% in a surprise announcement by administration officials early Monday morning. China has likewise retaliated with embargo-level tariffs, only to return to a 10% retaliation. Those figures could rise again this summer after 90-day negotiating clocks expire. Trump has also imposed tariffs on steel and autos, and pledged further levies on other sectors.

Among Trump's shifting goals for the trade war, one message has been consistent: Tariffs are meant to bring manufacturing back to the U.S. The White House has touted announcements by some manufacturers that they plan to increase production in the U.S.

But the immediate effect of the trade war has been to freeze many companies' investment plans.

Manufacturing activity contracted for the second straight month in April, according to the Institute for Supply Management. The ISM survey showed that prices for manufacturers' inputs rose to their highest level since June 2022 and that production slowed.

Retaliation would likely hit Columbus hard. Its economy relies disproportionately on exports, as do other similarly situated cities. Exports accounted for some 29% of Columbus's gross-domestic product in 2023, according to an analysis for Barron's by Moody's Analytics. That makes the city four to five times more reliant on exports than the country as a whole, Moody's says. Other cities whose export share exceeded 20% included Racine, Wis.; Decatur, Ill.; and Greenville, S.C.; which are home to consumer goods factories, agricultural companies, and auto manufacturers. All of Columbus' federal representatives are Republicans, making them prime targets for retaliation, as some countries have said they would target red-leaning and swing states.

"Tariffs are a key part of President Trump's America First agenda, but just one part. The Trump administration is also slashing regulations, unleashing American energy, and pushing for tax cuts -- including no tax on overtime and full deductions for investments in equipment," said White House spokesman Kush Desai in a statement. Trump is set to repeat the strong economic performance of his first term, Desai said.

The tariffs are of particular concern to Cummins, which employs more than 7,000 people in the Columbus area. Columbus was already a manufacturing town when Cummins was founded in 1919, but the company's growth supercharged the city.

The company's success has changed the face of Columbus. The Cummins Foundation has paid design fees for some local building projects and is credited with popularizing modernist architecture in town. The result is that one of the smallest metro areas in the country has seven National Historic Landmark buildings, designed by midcentury heavyweights such as Finnish-American modernist Eero Saarinen. Before designing the pyramid in front of Paris's Louvre, I.M. Pei drew up the Bartholomew County library in downtown Columbus.

The trade war has clouded Cummins' outlook. Since Trump announced auto-related tariffs in February, its stock has fallen 15%, despite spiking more than 7% after this past weekend's U.S.-China trade agreement. The company this month withdrew its earnings guidance for the year, citing "growing economic uncertainty driven by tariffs."

"A unilateral tariff approach poses significant risks, including increased supply-chain costs, retaliatory tariffs, reduced competitiveness, and lost sales," Cummins said in a statement to Barron's. "These challenges could hinder growth and place American manufacturers at a disadvantage in the global market."

The levies are hitting Cummins' suppliers as well. In Edinburgh, Ind., just north of Columbus, GTR Enterprises is waiting for a Chinese manufacturer to complete some molds that it is planning to use to make plastic parts for one of its customers. General manager Richard Kellems said that even the 145% China tariffs, before they were scaled back this week, weren't nearly high enough for it to make economic sense to buy the molds from a domestic supplier instead.

Still, GTR's executives hope that the tariffs might benefit the company, just as Trump said they would. Since the April 2 tariff announcement, many companies that use foreign suppliers have asked GTR to give quotes for potential new business. But as of mid-May, none had placed orders. Potential buyers are waiting to see whether tariffs will actually remain in place, says Michael Cirone, chief marketing officer of Manar, GTR's parent company.

"They're preparing and trying to understand who their potential sources are if they need to make a move." Cirone says. "People don't understand what's going to happen. There's a lot of uncertainty right now."

The uncertainty is putting some growth plans on hold. Columbus area economic development official Jason Hester says a German company, which he declined to name, in April decided to shelve a project. Hester says that in April, he attended a major manufacturing conference in Germany. He heard from companies that were considering opening plants in the U.S. but were deterred by increased costs the tariffs could bring for equipment and materials they would have to import.

"It's frustrating. It feels like a man-made -- I don't want to call it a disaster yet -- but a man-made problem," Hester says.

Some Republican lawmakers appear uneasy with Trump's unilateral decision to impose tariffs. A bill that would require congressional signoff on tariffs picked up seven Republican co-sponsors, including Young, one of the Indiana senators whom Columbus Mayor Ferdon asked for relief. Sen. Chuck Grassley (R., Iowa), whose state depends on agriculture exports, also supports it. The White House has issued a veto threat, and the bill isn't expected to move forward.

But the uncertainty caused by the global trade war, along with unrelated local issues, are leading Columbus officials to err on the side of caution.

"There are other communities throughout Indiana that are very manufacturing-heavy that are watching it the same way we are," says Ferdon, who, like most elected officials in Indiana, is a Republican. The mayor says she and the city council are likely to limit any budget increases in light of the economic uncertainty. She says that when she speaks to the general public, they often see tariffs as "being a good thing to bring manufacturing back," but the executives who run manufacturers are more cautious. She's hopeful that the administration's negotiations will result in trade deals that ultimately grow the market for Columbus' products around the world.

"I just hope the sooner the better," Ferdon says. "The uncertainty hurts."

Write to Joe Light at joe.light@barrons.com

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May 16, 2025 21:30 ET (01:30 GMT)

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