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Trump's China tariffs could deal another blow to this South Carolina county

Key Points
  • A local plant in Winnsboro, South Carolina, is going out of business, and the company is pointing blame at the Trump administration's latest wave of tariffs on imported goods from China.
  • Element Electronics says it will lay off 126 workers in the process.
  • The company, which assembles televisions made from imported Chinese parts, is hoping to get an exemption to the tariffs in time to allow them to reopen their doors.
Tariffs could deal another blow to small SC town

In just over a month, a local plant in Winnsboro, South Carolina, will close its doors, pointing blame at the Trump administration's tariffs on imported goods from China, unless it's granted a lifeline in the trade war. Element Electronics, which assembles televisions made from imported Chinese parts, says it will lay off 126 workers in the process.

In a letter sent to government officials, obtained by CNBC, the company said the "layoff and closure is a result of the new tariffs that were recently and unexpectedly imposed on many goods imported from China, including the key television components used in our assembly operations in Winnsboro."

The company added it hopes the closure will be temporary and it will be able to reopen in "three to six months." The letter says the closing will commence on Oct. 5, with a skeleton crew of eight remaining.

Element did not respond to repeated requests for comment from CNBC. In a statement on its Facebook page, Element wrote: "As we are the only USA assembler of televisions, we believe the inclusion of our parts on the list of affected products is accidental and resolvable. Element is working hard to have our parts removed from the tariff list and we remain hopeful that the closure of our South Carolina factory will be avoided."

State Sen. Mike Fanning, D-17th Dist., said keeping the factory open is his top priority, adding that state lawmakers at every level are putting aside partisan politics to save these jobs, including Republican Gov. Henry McMaster, a Trump ally.

The Element Electronics plant in Winnsboro, S.C. says it will close beginning on October 5, pointing blame at the Trump Administration’s tariffs on Chinese imports.
Kate Rogers | CNBC

"Folks will lose their ability to make their mortgage, their health insurance — that final gut blow comes on Oct. 5," Fanning said. "The only thing that would change that is if we can get an appeal in time to allow them to reopen their doors to start production. This is not the way to do tariffs — if you want to have a tariff policy, make sure that you are taxing people that are competing against Americans."

A spokesperson for the U.S. Trade Representative clarified that there is no "appeal for exemption" on tariffs that do not yet exist. Rather, companies such as Element have been invited to comment on the proposed list of products to be subject to increased tariffs, including whether proposed products on the list should be retained or removed or whether products not currently on the list should be added. The USTR says the proposed tariffs Element is hoping to avoid have not been finalized or implemented and are not yet in effect.

Residents raising concern

Fairfield County, where Winnsboro is located, has suffered a series of unrelated economic blows in recent years. A Walmart shut its doors, as did a textile factory. A hospital in Winnsboro is preparing to close, and a major multibillion-dollar nuclear power plant project was halted — all resulting in thousands losing their jobs. The city's main drag, Congress Street, is lined with empty storefronts standing in stark contrast to a number of newer businesses, underscoring the rural community's challenges.

"When President Trump first announced tariffs were coming we were excited. In fact, Element talked with us about leasing the Walmart so they could double their operation," Fanning said. "That excitement turned to devastation when we learned that tariff was not just on the product, but on the parts to the product." The most expensive part that Element imports for assembly is the glass that goes behind its television screens, he said.

Local business owners are concerned about another blow to the area. Whitney Brown, owner-operator of a Sonic restaurant across the street from the facility, said she generates a sizeable amount of business from Element employees.

"Element has a huge impact on our sales — my breakfast sales are definitely pretty big because of Element," she said. "We have a lot of people here whose family members have jobs there. It's going to hurt us a bit."

Meanwhile, Crystal Paulk, co-owner of The Donut Guy, said her sales will stay afloat even with another local business closing. But as a Winnsboro resident, she worries about her community.

Crystal Paulk and her daughter, Imani, say the family business will stay afloat in the wake of another company closing. But as Winnsboro residents they’re concerned for their community.
Kate Rogers | CNBC

"I look at it as doors closing. Those are jobs, those are parents, those are families impacted. Those are their dollars — that trickles down to us — and we are blessed in that we do a variety of things like mobile and catering besides our location here," she said. "So my bigger concern is them before me."

Trump administration ties

The factory caught up in the trade war also has ties to members of the Trump administration: Mick Mulvaney, director of the Office of Management and Budget, as well as U.N. Ambassador Nikki Haley. Mulvaney represented Fairfield County during his congressional term, and Haley was governor and helped lure Element to Winnsboro some five years ago, when the company received grant money to relocate. Fanning told CNBC he has spoken with Mulvaney, who is advocating the company's position for the appeal.

A senior OMB official told CNBC that "these discussions are internal and pre-decisional. Director Mulvaney continually advises the president on many policy matters, including trade and tariffs as a whole, and ultimately President Trump will make the final decision," adding that Mulvaney has never spoken with the president specifically about Element.

The White House directed CNBC to the Office of the U.S. Trade Representative, which declined to comment on tariffs under consideration. The South Carolina governor's office also did not immediately respond to request for comment, nor did the U.S. Mission to the U.N. regarding comment from Haley.

Criticism of Element

Element's push for a tariff exemption isn't without its critics. One vocal party has been the Alliance for American Manufacturing, which claims Element's "assembled in America" language is misleading to consumers who believe they are buying an American-manufactured product.

"What Element Electronics wanted to do — and continues to want to do — is play both ends. It took advantage of Americans' genuine, admirable desire to buy more American-made products while also remaining heavily dependent on manufacturing in China. It used taxpayer dollars to help fund its South Carolina facility, but it all amounted to nothing more than a PR stunt," the group wrote in a recent blog post.

Fanning fired back at the criticism: "Here in Fairfield County, South Carolina, we are sick of the political in-fighting, nit-picking, and unhealthy attacks on a county that is trying to keep our heads above water. Our 126 workers and our Element television manufacturing plant deserve better. They deserve the support of a 'part' exemption tariff request. If not, this will be one more industry forced overseas."

Read the Element Electronics letter obtained by CNBC:

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Key Points
  • Companies like the American Keg have been suffering the unintended consequences of Trump's tariffs.
  • When President Donald Trump first proposed import tariffs on aluminum and steel, American Keg was hopeful it might benefit.
  • Since the tariffs have been imposed, however, activity at the company's manufacturing facility has cooled off and it's staff has been slashed by a third to close to 20 people.