Several pro-Trump states would be injured by a trade war

Several pro-Trump states would be injured by a trade war
© Getty Images

As the U.S. and China dance around tariff threats, at times fueling market fears of an impending trade war, the big question is which American exporters will be hurt the most. 

Export data from the U.S. Census reveals how much certain industries in each state stand to lose, which I highlight in my report for consumer research group ValuePenguin. China’s tariffs already target the leading U.S. exports to China, including civilian aircrafts, engines and parts, motor cars and vehicles and soybeans.

ADVERTISEMENT
For export businesses in states such as Washington, California, Texas, Louisiana and South Carolina, the impact from a trade war with China could be dire. Collectively, they provide 51 percent of the total value of U.S. commodities exported to China.

 

For instance, Washington exports last year accounted for 14.19 percent of the total value of U.S. commodities exported to China, ranking first among all states at $18.28 billion. The state’s top three exports included $10.43 billion in civilian aircraft, engines and parts; $3.72 billion in soybeans; and $932 million in cars.

Although the state trades with other countries, its largest export market is China. Two-in-five jobs in the state are tied to international trade, according to the Washington Council on International Trade. A trade war with China would likely affect many of those jobs.

In a worst-case scenario, The Peterson Institute for International Economics estimated that potential job losses in California could total 640,000 if the U.S. imposed a 45-percent tariff on China and a 35-percent tariff on Mexico and those countries responded similarly.

We’re far from that level of trade tension, but California exporters will still feel the pinch if China makes good on its tariff threats.

Last year, California provided 12.75 percent of the total value of U.S. commodities exported to China, ranking second in the nation at $16.43 billion. The state’s top exports included $2.67 billion in electric cars; $1.15 billion in machines and parts for manufacturing semiconducting devices; and $935 million in mobile phones.

Some of California’s other major exports to China — including nuts, fruits and wine — would also be affected by China’s new 15-percent tariffs.

A trade war between the two nations could also disrupt exports from Texas ($16.28 billion in China exports in 2017); Louisiana ($7.97 billion); and South Carolina ($6.62 billion of products). These states followed Washington and California in the top five exporters to China by volume.

What was particularly interesting in my analysis was the potential political implications of a trade war with China. Six of the top 10 exporter states — Texas, Louisiana, South Carolina, Ohio, Michigan and Alabama — all voted for Donald Trump in the 2016 presidential election.

Similarly, CNN Money also reported in early March that the five states most dependent on manufacturing-based employment — and thus also sensitive to the steel and aluminum import tariffs Trump announced — are Alabama, Indiana, Iowa, Michigan and Wisconsin, all states that voted for Trump in 2016.

The Brookings Institution, which also looked at all the products China has threatened to put tariffs on, calculated that 2.1 million jobs spread across 2,783 U.S. counties are at risk. Eighty-two percent of those counties voted for Trump in the last presidential election. 

With the 2018 midterm elections around the corner, will President TrumpDonald John TrumpNFL freezes policy barring players from protesting during anthem McConnell spokesman on Putin visit: 'There is no invitation from Congress' Petition urges University of Virginia not to hire Marc Short MORE be able to sustain a protracted conflict with China, especially if it hurts his supporters? While Trump has famously said that a trade war will be “easy to win,” China’s retaliation suggests that it plans to play a long game.

In the midst of all this, fears of job losses, rising prices on consumer goods and economic uncertainty are mounting across the country.

Fortunately, Chinese Premier Li Keqiang has urged the United States to continue negotiating a compromise and avoid a full-scale trade war. His latest step is encouraging.

On Tuesday, Li Keqiang, offered some relief from the recent escalating tensions, saying China would cut tariffs on car imports by year-end. This addressed one of President Trump’s trade grievances.

But analysts note that pledge isn’t a major pivot from earlier promises from China, and addressing auto imports is far from solving the trade pressures between the two countries.             

David Ascienzo, Ph.D., is a data scientist at consumer research group ValuePenguin.com. He conducts research and analysis on a variety of topics that directly impact the American consumer. ValuePenguin research aims to help consumers make better decisions when it comes to investing their time and money.