Op Ed

Trump’s Tariffs Hurt Wisconsin Economy

And his immigration policies impair the ability of employers to fill jobs.

By - Jun 11th, 2018 12:05 pm
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Donald Trump. Photo from whitehouse.gov.

Donald Trump. Photo from whitehouse.gov.

With friends like Donald Trump, the Wisconsin economy needs no enemies.

The retaliation by foreign governments to his sledge-hammer tactics in raising tariffs on incoming products, so far mainly on steel and aluminum imports, is already having a boomerang blowback on Wisconsin manufacturers. Examples:

  • It is raising the costs of raw materials and therefore prices of Regal Ware’s cookware and appliances, making it harder to compete with its exports – 65% of its revenue. Regal Ware employs 200. Will its employment drop if its sales drop?
  • Ditto for other steel and aluminum users like Briggs & Stratton, Ariens and Mercury Marine. Wisconsin is the second most manufacturing intensive state, so this state, which helped Trump win the presidency with its ten electoral votes, will be disproportionately affected by his growing trade war.
  • New counter-tariffs by Mexico on U.S. food products will slam the state’s dairy industry. Mexico buys nearly one-quarter of our dairy output. Sartori Cheese says the blowback will be “pretty devastating.” Canada has also slated tariffs on dairy products.
  • Ditto with pork exports for companies like Johnsonville Sausage. Mexican tariffs will go to 20% from 10% on July 5.
  • Ditto with soy beans, a big crop here.
  • Miller-Coors prices will rise because the costs of aluminum cans will rise. Higher prices generally spell lower unit sales.
  • Thousands of suppliers down the supply chain, like Serigraph, which makes graphic parts for the whole goods manufacturers, will also see reduced business.

The puzzle in all this trade turmoil is that trade issues with our North American allies are not that big a deal. By far, the biggest trade deficits are with China and Germany. We are not that far from trade neutral with Canada.

The solution with those two countries is not to restrict their low-priced imports, which help the American consumer. It is to persuade and push those two countries to buy more American goods. China has already made a preliminary $50 billion offer in that direction. Isn’t that the better way to reduce the trade deficit?

In another dimension, the Trump Administration is obsessively attacking immigration in all forms, even legal immigration, to the detriment of Wisconsin. The president wants to cut legal immigration, which has been around the million level of entrants for years, to half of that.

The problem: with a very low unemployment rate, Wisconsin employers can’t find enough workers. There are more job openings that job applicants.

The worker shortage is especially acute for dairy farmers, who rely heavily in immigrant labor. Some dairy farms will have to shut down.

Long term care is another industry that will be crippled without a low-cost labor supply.

Even Wisconsin Manufacturers and Commerce, the state’s biggest business lobby that is usually lock-step with the Republican Party, opposes the Trump Administration on immigration policy.

Long and short, it hard to see how President Trump’s volatile trade and immigration policies help this state.

The president is good at picking fights. Twitter insults against foreign leaders are a dubious bargaining tactic. (I am trying to think of an instance where insults helped cut a deal in business or government.)

He is good at ripping up foreign policy agreements that took years to negotiate with allies. These are allies like Canada and France who have been with us in every war. Their boys died next to ours. Why not respectfully rework these agreements instead of just walking away?

He is outstanding at reducing levels of trust with partners and established
institutions.

I like the theory that world trade promotes world peace. Countries are less likely to go war if they are trading partners. Or if there is a lot of cross-border investment. Please, China and Russia, buy more U.S. real estate and assets.

On the very bottom line, business likes certainty and predictability so it can invest for the long term. If the president’s men spelled out their trade strategy, that would offer some certainty. As with other major policy arenas, they haven’t promoted an often-missing Plan B.

If their approach is a lot of rhetoric, insults and wild slap shots, world trade will suffer, and Wisconsin employers and employees will suffer more than most. Wisconsin generally has a trade surplus – more exports than imports.

John Torinus is the chairman of Serigraph Inc. and a former Milwaukee Sentinel business editor who blogs regularly at johntorinus.com.

Categories: Op-Ed, Politics

7 thoughts on “Op Ed: Trump’s Tariffs Hurt Wisconsin Economy”

  1. Terry says:

    Trump starting a trade war is just what Wisconsin needs, just as a record number of family farms go bankrupt and poverty rates just hit 30 year highs in Wisconsin thanks to Walker and republican’s idiocy! That’s right, poverty rates are at 30 year highs in Wisconsin. Amazing, it only took Walker and Republicans 8 years to do it.

    https://www.usnews.com/news/best-states/wisconsin/articles/2018-06-09/study-wisconsin-poverty-rose-in-2016-despite-job-growth

    Dump Trump
    Dump Walker
    Dump ALL republicans
    To hell with poverty!!

  2. Brian says:

    These are Republican tariffs.

    Repeal and replace Republicans. All of them.

  3. Dumbledore says:

    Mr. Torinus, it would be helpful if the broader business community would simply communicate to Republicans that international trade deficits are simply not a problem in and of themselves because the United States has such a different consumption pattern than the rest of the world.

    Take car ownership – the US has 910 vehicles for every 1,000 people. Canada is 662, Japan is 591 and Germany is 572 to pick a few examples. Look across other industries – electronics, appliances, building materials – and clearly Americans consume more per capita than other countries. How is an Asian country that ships high-end electronics to the US going to balance that out by buying low-value US soybeans? It is virtually inevitable that the US would run a trade imbalance and is actually an indication that the US economy is performing well.

  4. daniel golden says:

    Trump must be using a Ouija Board to set his tariffs, because the mish mash of duties make no sense in any rational world. We all should have listened when Prof. Kelly at the University of Pennsylvania business school called Trump “the dumbest f—ing student I ever had”.

  5. Eric J. says:

    -It is difficult to reason with such a low information petulant President conducting subsequent policy initiatives.
    -Wisconsin Trump voters will see it in lost business income and likely lost jobs.
    -None of that makes America great again.

  6. Bruce Thompson says:

    Even if foreign countries did not retaliate, a tariff on steel would be bad for Wisconsin. It pushes up the costs of Wisconsin manufacturers that use steel making it more difficult to compete with overseas competitors who are able to import steel tariff-free so long it is in the form of a finished product.

  7. Brewer says:

    Thanks for the article and the itemization. I am sure more damage will be inflicted before the end of this president’s* term. This is no surprise, though. Trump is doing exactly what he said he would do during the campaign. I learned about tariffs in 7th grade US History and high school economics. So I was surprised on election day that Wisconsinites would shoot themselves in the foot by voting in Trump. If there was a backbone anywhere in Congress, this nonsense would come to an end. Shameful.

    Please remember to vote!

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