The nation’s largest business trade group on Monday (July 2) issued its strongest rebuke of trade tariffs recently imposed by the Trump administration on China and U.S. allies in the European Union (EU), Canada and Mexico, saying the levies on imported goods were nothing more than a tax increase on American consumers and businesses.
The U.S. Chamber of Commerce made those comments in releasing new analysis that outlines a state by-state impact of retaliatory tariffs from China, the European Union (EU), Mexico, and Canada, which have been imposed in response to new U.S. tariffs on imported goods.
The analysis further shows that Arkansas manufacturers, farmers and consumers will receive a $339 million hit from retaliatory tariffs, with the biggest blow from $225 million in Arkansas goods targeted by Canada in response to the Trump’s administration announcement in June that will impose tariffs on steel and aluminum exports from Canada, Mexico and the EU.
“Tariffs are beginning to take a toll on American businesses, workers, farmers, and consumers as overseas markets close to American-made products and prices increase here at home,” said U.S. Chamber President and CEO Thomas Donohue. “Tariffs are simply taxes that raise prices for everyone. Tariffs that beget tariffs that beget more tariffs only lead to a trade war that will cost American jobs and economic growth.”
The U.S. Chamber, typically one of the strongest business allies for President Trump, also noted in its report that nearly $75 billion worth of U.S. exports will be subject to retaliatory tariffs if the administration continues its current path.
“Escalating tit-for-tat trade actions promise to raise costs on American businesses and consumers, making it harder for families to afford everyday products like toilet paper, condiments, coffee, and ballpoint pens, which have been targeted for retaliation,” the Washington, D.C.-based trade group said.
In Arkansas, the U.S. Chamber notes that the state’s paper goods, oilfield equipment and greeting cards industries will take the hardest hits from Canada’s the nearly $13 billion in retaliatory tariffs announced last week. The state’s paper and paperboard companies export nearly $48 million worth of goods to Canada each year. Oilfield casing and tubing manufacturers and greeting card publishers export another $37 million and $28 million, respectively.
Besides Canada, Mexico exports targeted for retaliation amount to $93 million annually. Arkansas companies that export to China and Europe will see business losses of $15 million and $5.5 million, respectively. Overall, the influential business group said Trump’s trade tariffs could eventually threaten more than 348,000 jobs in Arkansas that are supported by global trade.
The U.S. Chamber’s grim warning is the latest salvo in a possible international trade war after President Donald Trump moved forward on June 1 with his threat to impose tariffs on countries that dump cheap steel and aluminum imports into the U.S. market. Citing U.S. national security interest under Section 232 of the Trade Expansion Act of 1962, the U.S. Commerce Department at midnight imposed a 25% and 10% levy, respectively, on steel and aluminum imports from Canada, Mexico, and EU countries after those three trading partners failed to come to terms on tariffs first announced on March 8.
Over the past week, EU, Canadian and Mexican trade officials have followed up on their threats to retaliate against the U.S. with levies on a long-list of American-made products ranging from apples and pork to whiskey and milled rice. The strongest blowback against the Trump administration’s trade policy came last week after Wisconsin-based motorcycle icon Harley Davidson said it planned to shift some production to Europe to offset $100 million in production losses due to retaliatory tariffs by the EU.
Gov. Asa Hutchinson. who has led seven overseas trade missions and signed several economic development deals with key trading partners in Europe, Asia, Mexico and China, has said he supported the Trump administration’s efforts to negotiate balanced trade deals with other countries but expressed reservations about the new tariffs.
“When it comes to our balance of trade, President Trump is right in putting pressure on our allies to respect the United States’ interest in a more balanced and fair trading relationship,” Hutchinson said in a statement to Talk Business & Politics following a trip to the White House in late May. “However, I have consistently cautioned the President to avoid a trade war that would harm Arkansas exports, including our agricultural commodities, that depend upon world markets.”
Besides the impact to key U.S. allies, the U.S. Chamber report does include possible impacts of President Trump’s plan to apply tariffs up to 25% on nearly $50 billion worth of “Made in China” goods that contain industrially significant technologies. China announced last week it plans to impose retaliatory levies on $34 billion in U.S. exports in direct response to the Trump administration’s trade policy.
According to U.S. Trade Office Representative (USTR) Robert Lighthizer, who Hutchinson met with in early June, the list of products consists of two sets of U.S tariff lines. The first set contains 818 lines of the original 1,333 lines that cover approximately $34 billion worth of imports from China. Customs and Border Protection will begin to collect the additional duties on July 6.
The second set contains 284 proposed tariff lines as benefiting from Chinese industrial policies that cover approximately $16 billion worth of imports from China. These goods, will undergo further review in a public notice and comment process, including a public hearing. Afterwards, the USTR office will issue a final determination on the products from this list that would be subject to the additional duties.
ARKANSAS STEELMAKERS BENEFIT
But not all Arkansas industries are suffering from the Trump administration’s trade policy. The steel tariffs imposed in early June have already led to a huge increase in steel prices. Last week, U.S. benchmark prices for hot-rolled steel coil in June were quoted at $902 per ton on the New York Mercantile Exchange, up 53% from $589 a year ago.
That spike in hot-rolled steel prices led Big River Steel to announce a $1.2 billion expansion on Friday at its scrap recycling and steel production facility in Osceola. That expansion is expected to create at least 500 new jobs that will pay a minimum of $75,000 per year. State economic development officials said the Northeast Arkansas’ steelmaker’s expansion is among the largest in terms of money spent in the history of the state and will double Big River Steel’s hot-rolled steel production capacity to 3.3 million tons annually.
In addition, Charlotte, N.C.-based steel giant Nucor Corp. recently announced it expects second quarter profits for the period ended June 30 to double its previous guidance. Nucor now expects second quarter results to be in the range of $2.05 to $2.10 per share, up 105% from its earlier guidance of $1.00 per share.
In May, Nucor Arkansas said it will invest $240 million in a new galvanizing line at its Hickman-based sheet mill. The new line will employ about 100 workers and will produce 500,000 tons each year. It comes right after the company opened a $230 million specialty cold mill in April at the site which also added 100 jobs. Nucor jobs will pay around $80,000 per year. The expansion is expected to be completed in the first half of 2021.