What Do Trump’s Tariffs Mean for South Carolina?
by Rick Patalunas.
When Donald Trump announced a 25% tariff on steel and a 10% tariff on aluminum, he surprised his White House staff, Republicans, Democrats and pundits. After the initial surprise, maybe the tariffs weren’t that much of a surprise. Tariffs were a Trump campaign promise and he has supported tariffs for 30 years.
But that didn’t prevent the chaos that followed. Some in the Administration said tariff exceptions would be granted, but others said, no, there will be no exceptions. It turns out that Canada and Mexico are granted temporary tariff reprieves and there may be more carve-outs.
Maybe the mixed messaging was not White House chaos. Maybe it was deliberate. Think of it as a smoke screen. It’s easier to hide behind chaos and confusion because no one has responsibility or blame. More importantly, it makes it difficult to understand the policy and what to expect when the tariffs are implemented.
Geography seemed to play a part in Congressional responses to the tariffs. Republican Sens. Orin Hatch and Jeff Flake, from the Western states of Utah and Arizona, respectively, came out against the tariffs. Sen. Flake said he will introduce legislation to stop the tariffs. Rust Belt Democratic Senators Joe Manchin of West Virginia and Sherrod Brown of Ohio supported the tariffs. From South Carolina, Sen. Lindsey Graham and Rep. Mark Sanford were against the tariffs.
In the Rust Belt
Campaigning in Pennsylvania’s 18th Congressional District, a Trump stronghold near Pittsburgh, Trump argued for the tariffs. He said they will boost Pennsylvania’s economy and “Your steel is coming back. It’s all coming back.” The speech sounded a lot like Trump’s first campaign – tough words and big promises. US Steel seconded that message by applauding the tariffs and agreeing that jobs will grow.
But the tariffs are not good for everyone in the Rust Belt. Good news for steel manufacturers is not good news for companies that buy steel. Reuters reported how Trump’s tariffs may actually cost Pennsylvania steel workers their jobs.
The NMLK mill, not far from where Trump spoke, imports around 2 million tons of steel slabs a year. NMLK then rolls the slabs into sheets for firms like Caterpillar, Deere, Harley Davidson and Home Depot. It’s nearly impossible to obtain the steel slabs from US steel producers. If NMLK’’s customers don’t accept a 25% price increase, as many as 1,200 NMLK employees could lose their jobs. Add to that the losses to support companies like the trucking companies that haul the steel sheets and the tariffs shrink the area’s economy even more.
In South Carolina
And tariffs may make things worse for South Carolina. Commerce Secretary Bobby Hitt said that South Carolina makes every list of states that could be impacted by the tariffs. Hitt explained that the tariffs are causing concern and uncertainty in South Carolina, home to about 400 auto-related companies. As a free-trade area, South Carolina depends on trade and tariffs could lead to a trade war. Trump says that trade wars are easy to win, but what would that mean for South Carolina?
The automobile industry would face increased steel prices to produce its cars. BMW employs 9,000 people in South Carolina and it’s also one of the largest auto exporters in the country.
If the European Union puts tariffs on car imports, the price of BMWs in Europe will increase. Will that mean fewer BMWs sold in Europe?
Boeing uses aluminum in its planes and employs about 7,500 people in South Carolina.
Over half of Boeing’s revenue is from overseas sales, and retaliatory tariffs would increase the price of Boeing’s planes. European Airbus is the primary competitor of Boeing; will Boeing lose business to Airbus?
South Carolina farmers export soybeans and China is the largest purchaser of soybeans.
If China imposes tariffs on soybeans, the prices charged by South Carolina farmers will increase. What will happen to sales if prices increase?
According to the South Carolina Ports Authority, the import and export industry employs about one in 11 people in South Carolina.
That’s about 187,000 people. If trade declines, will those folks still have jobs?
It’s not just South Carolina’s ports. If fewer BMWs, Boeing jets and soybeans are sold, will that lead to fewer jobs in South Carolina? Workers don’t like uncertainty. Businesses don’t like uncertainty.
So…this is the plan to Make America Great Again in South Carolina.