Jul 02, 2018 - 4:00pm

Workers, Farmers, Families, and Business are All Losers in a Trade War


Senior Editor, Digital Content

bloomberg_cargoship_port_oakland_1600px.jpg

A cargo ship is guided into the Port of Oakland.
A cargo ship is guided into the Port of Oakland.

It's finally here: Retaliation Week, when other countries impose tariffs on about $75 billion worth of U.S. goods in retaliation for U.S. tariffs on steel and aluminum and certain Chinese imports.

Canada – the United States’ top trading partner – on July 1, was the latest country to slap retaliatory tariffs on our exports, putting tariffs on $12.6 billion worth of steel, ketchup, pizza, dishwasher detergent, and other goods.

The U.S. Chamber produced a map at www.thewrongapproach.com, showing how individual states are affected by tariffs from China, the European Union (EU), Mexico, and Canada, as well as the number of jobs exports support in individual states.

Here are four takeaways.

1. China, the EU, Mexico, and Canada account for the largest share of U.S. exports being hit with tariffs

Here’s the breakdown of the amount of exports now subject to retaliatory tariffs:

  • China: $36.8 billion
  • EU: $3.2 billion
  • Canada: $12.6 billion
  • Mexico: $3 billion

2. The biggest states don’t always take the biggest hit

You would think that states with the biggest economies would take the biggest hits.

That’s not necessarily the case.

California and Texas have the nation’s two largest state economies, and billions of dollars of exports are affected – $5.6 billion and $4 billion respectively.

However, Washington State has a larger share of exports affected by tariffs – $6 billion. That’s because it’s one of the most trade dependent states in the Union.

Another example is Alabama. It’s exposure to retaliatory tariffs is $3.6 billion worth of export, not far behind Texas. Most of this comes from $2 billion worth of auto exports to China.

3. Politically targeted tariffs

China, the EU, Mexico, and Canada were savvy by strategically targeting important industries in certain states.

Kentucky, home state to Senate Majority Leader Mitch McConnell (R), has $1.5 billion of its exports threatened. The biggest hit comes from tariffs on $856 million worth of auto exports to China. However, the Bluegrass State’s famous tipple is targeted.

The EU slapped duties on $180 million worth of Kentucky bourbon. Canada, Mexico, and China did the same. All told, $217 million worth of bourbon is covered by new tariffs.

As for Wisconsin, home to Speaker of the House Paul Ryan (R), it has $1 billion of its exports threatened.

The state is the nation’s top paper producer. Canada took notice by placing tariffs on $175 million in paper towels, tissues, and toilet paper exports.

The dairy industry is also targeted. China tacked tariffs on $47 million worth of whey, a byproduct of cheesemaking, and Mexico put tariffs on $31 million of Wisconsin cheese. That’s a big deal because Mexico is the top market for U.S. dairy exports.

Harley-Davidson, a state icon, is also getting dinged. The EU placed tariffs on $204 million in U.S. motorcycle exports. Harley-Davidson motorcycles are assembled in Pennsylvania, but bike engines are made at the company’s headquarters in Wisconsin.

4. Exports hit Trump states

Here’s a tidbit for political analysts to chew on: In the 30 states President Trump won in the 2016 election, $36.5 billion worth of exports are threatened by retaliatory tariffs from China, the EU, Mexico, and Canada.

Here are three states for example:

  • Ohio: $3.3 billion
  • Michigan: $2.3 billion
  • Pennsylvania: $1.7 billion

One thing is for sure, no one will win this tit-for-tat, trade struggle. Consumers wil pay more for goods and businesses will have a tougher time exporting their products to world markets.

“The administration is threatening to undermine the economic progress it worked so hard to achieve,” said U.S. Chamber President and CEO Tom Donohue. “We should seek free and fair trade, but this is just not the way to do it. It’s time to reverse course and adopt smarter, more effective approaches for addressing trade concerns with commercial partners.”

Go to the map at www.thewrongapproach.com to see how your state is affected. Then tell your members of Congress to oppose these tariffs.

About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.