The tariffs already in place are raising the prices of components that many manufacturers depend on and must secure from global supply chains. The threat of other tariffs, and of retaliation from the trading partners Mr. Trump is targeting with his actions, has added an additional layer of unease. Trade groups and executives warn that the uncertainty is undercutting some of the benefit that businesses expected from the tax cuts Mr. Trump signed into law.
Federal Reserve officials frequently cite trade tensions as a threat to investment and economic growth. Minutes from the May meeting of the Federal Open Market Committee said that in many regions of the country, the Fed’s business contacts “expressed concern about the possible adverse effects of tariffs and trade restrictions, including the potential for postponing or pulling back on capital spending.”
Plug Power employs more than 600 people in the United States, including 300 at its factory in Latham, N.Y., where it assembles fuel cells that run on hydrogen. In February, it was poised to continue increasing its investment in the United States, thanks to a bipartisan bill that extends, then gradually phases out over time, a tax credit for fuel cells. Mr. Marsh had been nervous about that bill’s prospects, but when it was approved, he said he felt “really good” about the future of his business.
For much of the spring, armed with the certainty of the tax credit, he was able to raise more capital for Plug Power to invest.
“With stability,” Mr. Marsh said, “I think 2019 would be a breakout year.”
In April and May, though, Mr. Marsh saw the stability of his supply chain begin to erode. Much of what goes into Plug Power’s fuel cells comes from abroad, including fans from Japan, radiators from Canada, tanks from Italy and harnesses from Mexico. One of the company’s suppliers buys raw steel from China.
At first, Mr. Marsh did not worry about the administration’s proposed steel and aluminum tariffs, and its escalating tensions with China. By May, after watching administration officials vacillate on proposed penalties against the Chinese telecommunications company ZTE, Mr. Marsh was more nervous. He hoped to expand Plug Power’s small presence in the Chinese market through a joint venture partnership with a Chinese company, but he worried about possible new restrictions from the administration on American investment there.
“When you have uncertainty,” he said, “you’re not as quick to hire. I’ve been slow.”
Perhaps most important, Mr. Trump’s proposed tariffs on $50 billion worth of Chinese imports included six products that directly affected Plug Power, including certain forklifts.