Cort Cortez, the electrical operations manager for Lassen Municipal Utility District (LMUD), delivered an urgent update to the LMUD Board of Directors on February 20, concerning potential financial implications from tariffs imposed by President Trump. The tariffs could affect the cost of importing large transformers from Mexico and a phase-shifting transformer from Brazil, potentially adding $2.5 million to LMUD’s expenses.
Contrary to popular belief, tariffs are not paid by the exporting country’s government; they are paid by the entity importing the goods, in this case, LMUD. These additional costs would likely be passed on to the district’s ratepayers. The two large transformers, manufactured by Siemens in Mexico, each cost approximately $8 million, while the phase-shifting transformer is being produced in Brazil.
Cortez explained that Siemens notified LMUD on February 11 about the new tariffs, following executive orders issued by President Trump on February 1. LMUD’s general counsel, Gene Chittock, confirmed that the district would likely be financially responsible for these tariffs.
The transformers were tested in January, but LMUD requested Siemens to store them until September when the district would be ready for delivery. The units, each weighing about 100,000 pounds, are being stored in Laredo, West Virginia. One transformer shipped on February 1, while the shipment date for the second remains unconfirmed.
Cortez noted that President Trump had temporarily suspended the tariffs until March 4. If the transformers reach the U.S. border before this date, LMUD could potentially avoid the $2.5 million tariff cost. Director Jess Urionguena inquired about the possibility of a tariff exemption for the nonprofit, publicly owned district.
Chittock stated that LMUD plans to request an exemption certificate while in Washington, DC, although no exceptions have been granted yet. He expressed hope that the transformers would cross the border before tariffs are enforced. The tariff on Brazilian goods is reciprocal, while the Mexican tariff stands at 25 percent.
Urionguena highlighted that the option to manufacture the transformers domestically was not feasible. Chittock assured the board that pursuing an exemption is a priority, acknowledging the significant financial implications and potential unintended consequences of the tariffs.
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