President-elect Trump has mentioned a 25% tariff on Mexico and Canada. Time to think about how this would affect Wisconsin, a state that voted for Mr. Trump.
Source: ITA.
Source: ITA.
Wisconsin imported $1.6bn from Mexico, $0.8bn from Canada in 2023. Total Wisconsin (goods) imports from the world were $7.8 bn, so a not inconsequential share (almost a third) comes from these two countries (just to recall for you, these are the other two members of the USMCA free trade area, formerly NAFTA. USMCA was negotiated under Mr. Trump’s first term).
Note that these figures of imports into Wisconsin are likely understating the actual imports. That’s because the documented destination state might not be the final destination, due to storage, warehousing, etc. See this note.
The president of Mexico has threatened retaliation against our exports. Presumably Canada would also do something in response. What does Wisconsin export to Mexico and Canada?
Source: ITA.
Source: ITA.
In 2023, Wisconsin exports $0.8bn to Mexico and $1.8bn to Canada, so a total of $2.6bn. Total goods exports to the world is $6.8bn, so these account for nearly 40% of Wisconsin’s total exports.
As noted earlier, the Midwest is particularly trade sensitive, so any trade war was going to hurt this region particularly hard.
In terms of nationwide impacts, Goldman Sachs (11/26), notes:
We estimate the proposed tariffs would boost the US effective tariff rate by 8.6pp and core PCE prices by 0.9%.
One thing to keep in mind about tariff spats – the incidence of harm is not evenly distributed. Some people will suffer a 0.9% rise in their cost of living due to tariffs, but some will suffer twice or three times that, while others will suffer less. Some people will lose their jobs, some will have their hours cut back, while some will have better jobs.
Trade strategists typically aim at imposing the greatest harm on rivals’ politically powerful constituencies; good old Parma ham and French cheeses and Japanese autos. When Mexico and Canada and China retaliate, they won’t do so blindly – somebody is in for a whoopin’ and that somebody will have clout.
Lawyers will come out big winners, especially if Trump imposes tariffs on his first day in office, without going through the motions of demonstrating that imports are causing harm or are subsidized. Arbitrary action, Trump’s favorite kind, is not what’s envisioned in our trade laws.
“At 79%, respondents ranked “to lower prices of goods and services” as what they would like to see be Trump’s top priority. The second question then asked, “Do you favor or oppose the U.S. placing new tariffs on goods imported from other countries?” 52% said “Favor,” while 48% said “Oppose.”” In the same survey 59% say tariffs will raise prices. (Leaving aside a general lowering of prices will mean a depression is going on – some people favor tariffs even if they raise prices? – that is what the disinformation sphere does to understanding of policy issues)
https://www.mediaite.com/politics/good-luck-america-veteran-journalist-finds-stunning-paradox-in-cbs-poll-on-trumps-tariffs-and-plan-to-lower-prices/