Trump’s trade tariffs could threaten Arizona’s core economy
Trade tariffs have been a bone of contention since the Boston Tea Party, and with the recent announcements from the Trump Administration, some economists are predicting as much as a $430 billion loss in the global economy.
It’s far too early to determine how much of a trickle-down effect the tariffs on China and Canada will have on the local economy, but Mother Road Harley-Davidson Vice President of Operations Tony Campbell isn’t fearful of a steep fall-off in revenue.
Harleys will continue to sell in the United States and overseas, especially in countries like Brazil and India where the iconic American motorcycle manufacturer already has plants due to high tariffs, he said.
It’s true that Harley-Davidson announced it would build more plants outside the United States, closing a plant in Kansas City and moving it to Thailand, but there’s more to the story, Campbell said.
“Trump tweeted out insisting that we were taking jobs overseas. The Kansas City closing was already planned,” the 17-year Harley-Davidson dealership executive said. “It’s not going to affect U.S. motorcycles at all. It got blown into a big story with Trump and the Harley-Davidson CEO (Matt Levatich) going at it on Twitter.”
Levatich said the decision to build in Thailand was made last year when Trump made it clear the United States would abandon the Trans-Pacific Partnership free trade agreement.
Trump slapped a 25 percent tariff on $34 billion of Chinese exports, from steel and aluminum to consumer goods, and he could take it in excess of $500 billion. He also stuck Canada with higher tariffs on steel, aluminum, wood and food products.
Tariffs impede growth, and the imposition of broad trade tariffs on Chinese and Canadian goods by the U.S. Department of Commerce could ignite a trade war, according to several news sources.
John Hansen, chief operating officer of Laron at Kingman Airport and Industrial Park, isn’t so sure, though he passed on an opportunity to comment about what Trump’s trade tariffs mean to his company.
He feels the media’s portrayal of tariffs as a “trade war” is a form of “Trump-bashing.”
“International trade agreements, like a calculus problem, present a very complex dynamic,” he said in an email to the Daily Miner. “In fact, they are so fluid that they really can’t be wholly and truthfully represented in a story. Instead, they require a fair and factual argument from which fully informed and well considered positions may be formed.”
Congresswoman Kyrsten Sinema, Democratic candidate for U.S. Senate, has no qualms calling it an “escalating trade war” that threatens Arizona businesses, farmers and consumers. She co-sponsored a bill in Congress to strike down tariffs that hurt Arizona businesses or raise prices for Arizona families.
“For a state like ours, trade wars raise prices on everyday goods and cut off markets for homegrown products,” Sinema wrote in an editorial for the Queen Creek Independent.
She said an “escalating and unnecessary trade war” threatens four of Arizona’s five C’s (copper, cattle, cotton and citrus) as well as a range of other products such as apples, manufactured goods and wine.
The newspaper industry would see a marked increase in operating costs from tariffs imposed on Canadian newsprint imports. It would be a major blow to local newspapers that are already struggling to stay afloat.
In a recent hearing before the U.S. International Trade Commission, a bipartisan group of 19 legislators asked the ITC to reverse the Canadian tariffs.
Though no final decision has been made, legislators are hoping for a favorable outcome. The tariffs would hasten the decline of local news, harming journalists and communities served by local rather than metropolitan newspapers, the lawmakers said.
“In these communities, there are no big newspapers to bring people their local news,” Rep. John Moolenaar, R-Mich., said on Rollcall.com. “These tariffs, if continued, would do lasting damage to these local institutions.”
Katherine Miller, director of public affairs for Nucor Steel, which operates a bar mill plant in Kingman, said the company has had strong performance this year because of increased steel demand.
“Tax reform and deregulation are driving gross domestic product higher,” she said in an email to the Daily Miner. “These strong economic conditions are resulting in increased demand. Steel tariffs are having their intended effect of removing dumped imports from the market, which is also benefiting U.S. steelmakers.”
The impact of steel tariffs on the economy as a whole will not be known for a few months, Miller added. They didn’t go into full effect until June. The same can be said for tariffs on Chinese products.
Campbell of Mother Road Harley-Davidson said there’s tremendous demand for Harley-Davidson products in India and China, and it makes financial sense to build there for a number of reasons. Labor is cheaper, you save big on transportation costs and you avoid huge tariffs.
“These international plants have state-of-the-art equipment,” Campbell said. “It’s our own fault. We want to buy cheap crap and then bitch about where it’s made.”