Editor’s Note: The Trump administration’s implementation of tariffs on goods imported into the U.S. is a continually evolving situation. Information contained in this article is accurate at the time of publishing and updates will be added as new details emerge.
Tariffs, a tax placed on imported or exported goods, were a key talking point during Donald Trump’s presidential campaign. Throughout his campaign he suggested placing tariffs on goods coming into the U.S. from a number of trading partners including China, Europe and others.
This left many companies, including those in the fluid power industry, wondering what the impact would be if the tariffs were put in place. During the National Fluid Power Association’s (NFPA) Fall Economic Webinar held in November 2024, presenter Lauren Saidel-Baker, CFA, economist at ITR Economics said tariffs typically lead to prices going up.
Saidel-Baker explained that the goal of tariffs is to protect domestic production by making cheaper foreign production more expensive. As such, this could lead to higher prices for companies sourcing components or materials from other countries to make their goods, including hydraulics and pneumatics suppliers.
On February 1, President Donald Trump announced the implementation of tariffs on goods imported into the U.S. from Canada, Mexico and China. Shortly after this, Canada and Mexico announced their own tariffs on goods imported from the U.S.
However, on February 3 the three North American countries agreed to a 1-month pause on tariffs. (See sidebar at the end of this article for additional details.)
Although delayed for now, the tariffs could still be a factor after the 1-month pause. And there are still tariffs on Chinese goods which is a large supply source for many companies. Tariffs imposed on goods imported into the U.S. from other countries are still possible as well.
Given the ongoing tariff situation and its potential effects on the hydraulics and pneumatics sector, Power & Motion spoke with members of the industry to get their input on how business conditions may be influenced by this trade policy.
How the Fluid Power Industry is Reacting to Tariffs
Since December, Power & Motion has been running a brief survey to gauge whether the fluid power industry feels potential tariffs imposed by the Trump administration will have a positive or negative effect on the hydraulics and pneumatics sector.
From those who have responded to date, the majority see the tariffs having a negative impact on the business environment for the fluid power industry and its customer markets, with 76% of respondents indicating as such and 24% saying they see positive impacts from the tariffs.
Upon President Trump announcing the tariffs on Canada, Mexico and China, Power & Motion reached out to members of the fluid power industry to get their input on how these tariffs could impact the sector going forward.
Ken Baker, CEO of Bailey, said the company anticipates some degree of disruption to its business. This comes at a time when he said it seems “markets and customers were just starting to turn the corner on business cycle improvement.”
Baker said Bailey anticipates impacts to its operations in both the U.S. and Canada. He foresees U.S. operations will experience price increases on honed tube and chrome rod due to the tariffs on Mexican and Canadian steel.
Rance Herren, CFPSD, AI, Director – Technical Services at Fluid Power SME and member of Power & Motion's editorial advisory board, agrees there will be impacts to manufacturing costs for components originating from Canada, Mexico and China. “To what degree is unknowable in the near term,” he noted.
He said the biggest challenge he sees the industry facing is determining if the increased costs can be absorbed or whether alternate sources must be established. “Depending on the complexity of the components, the actual impact on the manufacturing costs as well as the installed base of equipment that must be supported with equivalent spares…I believe most businesses in the short term will wait and see before making significant changes,” said Herren.
“The speed with which these tariffs were implemented has left us uncertain about how to proceed,” noted Baker. He said the company is rapidly working on making decisions on how to move forward and for the moment it plans to pass along additional tariff costs to customers which may hinder future business. “We expect that costs passed through to customers will cause end-product [price] increases and business reduction.”
Tolomatic, on the other hand, is looking at alternate sources for those components it imports from China. “We have been working for the past 24 months on reducing our dependency on China-sourced components,” said Paul Carlson, President & CEO of Tolomatic Inc and member of Power & Motion's editorial advisory board. “We have established non-Chinese sources for all the components that we currently purchase from Chinese vendors. We are now able to flex toward sourcing from several different countries, including the U.S. as economic conditions dictate.”
However, Carlson noted it will be a major challenge to move from well-established and qualified Chinese vendors to second source vendors located in other countries. “Today, component pricing from China is very competitive,” he said.
In general, the tariffs are likely to pose additional difficulties for the fluid power sector after experiencing tough market conditions in 2024.
“We see no business benefit from these tariffs,” said Carlson. “These tariffs make our business more expensive and less competitive. They also harm our customers who are dealing with similar challenges.”
