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Jun 19, 201810:22 AMInside Wisconsin

with Tom Still

Wisconsin’s congressional delegation should weigh in on trade, tariffs

(page 1 of 2)

Beyond a relative handful of protectionists and favored industries, it’s hard to find an economist, business leader, or other expert who believes President Trump is on target with his unilateral trade war.

Yes, Trump appears within his legal rights to call for tariffs for national security reasons — the result of decades of congressional ceding of power to the White House. Yes, the president is correct to worry about the trade deficit with China and allegations of dumping cheap products in U.S. markets. And, yes, European allies who don’t like Trump’s call for tariffs must recognize they have plenty of their own on the other side of the Atlantic Ocean.

That doesn’t change the fact history is clear about what happens when a full-scale trade war erupts, and who some of the first casualties might be.

As long ago as June 1930, less than eight months after the New York Stock Exchange crashed to begin the Great Depression, the Smoot-Hawley Tariff Act was signed to raise fees on all sorts of imports. Other countries responded with tariffs of their own and the Great Depression deepened. Ordinary Americans suffered as jobs and livelihoods were lost.

Generations later, economists, manufacturers, retailers, farmers, the World Bank, the Business Roundtable, and even an internal report by the White House Council of Economic Advisors are warning that Trump’s tariffs, if fully enacted, will slow the growth of the U.S. economy and damage growth worldwide.

It’s the president’s style to push negotiations to the brink, so it’s possible Trump might back off his own tariffs should he obtain what he thinks is a better deal from China or the European Union.

In the meantime, the uncertainty is causing many members of Congress — Republicans and Democrats alike — to ask why the same president who pushed for tax cuts to spur the economy is applying the brakes on growth through tariffs. It’s a conversation that should include those members of Congress who represent one of the nation’s most trade-sensitive states: Wisconsin.

Wisconsin must maintain a vigorous level of exports across a mix of sectors to prosper. It is a manufacturing state, an agricultural state, a raw materials state, and a technology state — diversity that helps when trade relations are strong and makes Wisconsin vulnerable when tit-for-tat tariffs disrupt the global economy.

Wisconsin businesses exported $22.3 billion in goods and services to 202 countries in 2017, an amount that grew by 6.1% over 2016. The three biggest destinations were countries Trump has singled out in his trade criticisms — Canada, Mexico, and China.

The core Wisconsin product list is extensive: industrial machinery, electrical machinery, medical and scientific instruments, vehicles and vehicle parts, plastic products, aircraft and parts, paper products, wood and wood products, and a long list of agricultural goods. In short, Wisconsin is a target-rich environment for a trade war.

(Continued)

Jun 20, 2018 03:22 am
 Posted by  davidrnewby

Tom,
Like most business commentators on trade issues, you talk about only one side of the equation: exports. Yes, exports are good for Wisconsin manufacturing, service and agricultural corporations (less effective for small businesses and family farms). But what about imports? If the value of imports from foreign corporations is greater than our exports, then we are losers in the trade equation. Unfortunately, it's hard to get statistics on the value of imports into Wisconsin. Do you have access to those statistics, Tom? What little I've seen indicates that Wisconsin is a loser when it comes to international trade, especially in the agricultural sector. But perhaps you can enlighten us.
David Newby, President
Wisconsin Fair Trade Coalition

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About This Blog

Tom Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal.

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