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Mar 6, 201809:20 AMInside Wisconsin

with Tom Still

Wisconsin has much to lose if a true ‘trade war’ breaks out

(page 1 of 2)

If President Trump gets his wish for a “trade war,” Wisconsin’s economy stands to be among the early casualties.

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.

Those kinds of retaliatory measures are what the markets and most economists fear now that Trump has declared the United States will impose steep tariffs on steel and aluminum imports.

It’s right for Congress and the individual states to warn the president that trade wars are not “good, and easy to win,” but a path toward destroying jobs, harming consumers, and protecting inefficient industries.

Wisconsin businesses exported $22.3 billion in goods and services to 202 countries in 2017, an amount that grew by 6.1% over 2017. The three biggest destinations were countries Trump has singled out in past trade criticisms — Canada, Mexico, and China. The chief target of the steel and aluminum sanctions is China, but Canada will be caught in the crossfire, as well.

Exports to Canada grew by 4.3% last year to $6.9 billion, according to the Wisconsin Economic Development Corp., which analyzes federal data. The Canadian surge was driven by increases in the export of mineral products and electrical machinery. Exports to Mexico grew by 4.8% to a record $3.2 billion, mostly because of a jump in the export of electrical machinery and soybeans. Canada and Mexico are anchors of the North American Free Trade Agreement, which Trump has vowed to dismantle.

Exports to China jumped by 21.6% to $1.7 billion in 2017, also a record for exports to that country. Leading the growth in exports to China were increases in shipments of aircraft and parts; industrial machinery; dairy products; wood and wood products; and raw hides and skins.

It’s no surprise that farm products are a major part of the Wisconsin trade picture, accounting for $3.5 billion in sales to 147 countries, with Canada, Mexico, and China ranking high on the list. Wisconsin is the nation’s 12th largest agricultural export state.

However, Wisconsin’s leading sector is industrial machinery at $5.4 billion, accounting for 24% of all state exports. Not far behind were electrical machinery and medical and scientific instruments, totaling $2.2 billion each and each representing 10% of the total exports.

Other major sectors are vehicles and vehicle parts ($1.9 billion); plastic products ($1.1 billion); aircraft and parts ($750 million); paper products ($881 million); and wood and wood products ($254 million).

In short, Wisconsin is a target-rich environment in a trade war.

(Continued)

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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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