Business coalition says trade war could cost Arkansas nearly 20,000 jobs; Gov. Hutchinson responds

As Gov. Asa Hutchinson wraps up his fourth Far East trade mission, a new report released Wednesday (Nov. 6) by a coalition of U.S. trade groups says the ongoing trade war could cost Arkansas nearly 20,000 jobs and that Arkansas businesses have already paid an extra $214 million in import taxes on products subject to Trump Administration tariffs.

The report, by a Washington, D.C.-based trade group known as Tariffs Hurt the Heartland, also states that Arkansas exports have faced $98 million in new retaliatory tariffs from our trading partners, including $12 million in August. The report notes that tariffs on goods from China accounted for $140 million of the new taxes paid to date. Overall, Arkansas imported $3.3 billion of so-called “List 4” products in 2018, of which $1.2 billion began facing additional tariffs of 15% on Sept. 1, and the rest will face additional 15% tariffs starting Dec. 15.

“These tariffs make Arkansas exports less competitive,” the Nov. 6 report concludes, noting that foreign trade supports nearly 335,000 of Arkansas’ 1.36 million civilian jobs. “President Trump should successfully negotiate with our trading partners and end these costly and harmful tariffs. Arkansas jobs are on the line.”

The new report was strategically released amid Thursday’s meeting between U.S. and Chinese trade officials, where the world’s two largest economies mutually agreed to roll back tariffs as part of a “Phase I” trade accord first reached in early October. To date, the Trump administration has imposed some $360 billion in tariffs on Chinese imports at four different times going back to March 2018.

GOV. HUTCHINSON RESPONDS
In a media availability via a video conference call with reporters at the State Capitol on Thursday, Hutchinson mentioned the “phase one” negotiations and offered that the Trump administration would eventually boost trade deals for Arkansas business and those across the nation.

“We are closer to a China trade deal than ever before and it is going to be good for the United States. And what has happened as a result of the current negotiations is that there is a lot of uncertainty in the manufacturing sector, and so decisions are being put off pending the outcome of trade negotiations,” said Hutchinson from his Tokyo hotel room.

When asked by Talk Business & Politics if the Trump trade imbroglio has resulted in any irreversible damage to the Arkansas economy, Hutchinson said he has continually expressed concern to the Trump administration that the ongoing business uncertainty would eventually hurt Arkansas and U.S. economic fortunes but there is still work to be done.

“There are some very legitimate issues that the U.S. has to have addressed, one is transparency enforcement, protection of intellectual property rights and that is not only a concern in the United States but is also with companies in Japan,” Hutchinson said from his Tokyo hotel. “So that has to be addressed as part of the Phase One agreement that will be very favorable to the United States.”

Hutchinson added: “I don’t believe it has been irreparable in terms of Arkansas. I think there has been a slowdown of investment opportunities because of the uncertainty but if this could be wrapped up in a favorable way, then Arkansas should be first in line to capitalize on investment and the sale of rice to the Asian markets.”

GLOBAL ISSUE, ARKANSAS PROJECTS
Arkansas Secretary of Commerce Mike Preston, who is director of the state Economic Development Commission under Hutchinson’s newly restructured government, also added that once a U.S.-China trade deal is completed, it would open other commercial markets to Arkansas businesses.

“It really is a global issue when you look at China and the U.S because indirectly it affects Japan and other Asian countries. And I think you will see that anywhere you go around the world,” said Preston, who is looking to recruit other Far East businesses to Arkansas during the trade mission.

During the media conference call, Hutchinson also provided an update on meetings with Chinese trade officials and business executives to move forward with the $1.5 billion Sun Paper project in Arkadelphia and the Shandong Ruyi Technology Group’s plans to invest $410 million to retrofit a 1.4 million square foot cotton-spinning, garment factory in Forrest City. Both projects are on hold due to the U.S.-China trade riff.

“The encouraging thing that I learned about the projects that despite international disputes surrounding trade, the government of China is still forward-leaning in terms of encouraging their businesses to do investments,” said Hutchinson. “So there is not any obstacle in terms of the government as it relates to the Sun Paper (and Ruyi) investments, and that was very encouraging to me.”

Hutchinson reiterated that the state Department of Environmental Quality (ADEQ) had finally approved an air permit to begin construction on the Arkadelphia mill, but said Sun Paper executives have to complete engineering work, confirm its financing is still in place after a three-year wait, and make sure that some trade matters are settled.

“For example, if you build a paper mill in the United States, and you ship goods back to China, you are going to be subject to a retaliatory tariff. And that was not a part of the original business plan,” said the governor.

Hutchinson, Preston and the Arkansas trade delegation will return to the U.S. to this weekend from their weeklong trade mission to the China and Japan, the fourth such visit to the Far East nation since the popular Republican governor office in early 2015. During the conference call, Hutchinson answered questions concerning his son, Asa Hutchinson III, accompanying him on the trip. Hutchinson said his son, whose Fayetteville law firm represents several Chinese businesses, paid for his own trip as did other business people that were part of the state’s official entourage, including Sun Paper’s Ray Dillon.