Group says trade war could cost Wisconsin more than 37,000 jobs

A town hall held at Husco International in Waukesha by Tariffs Hurt the Heartland in 2018.

Last updated on July 2nd, 2019 at 09:07 pm

The continued escalation of trade tensions with China and other countries could cost the United States more than 2.2 million jobs, including a projected net loss of 37,344 in Wisconsin, according to data released Wednesday by Tariffs Hurt the Heartland.

The advocacy group has been holding town hall meetings around the country, including in Wisconsin, to draw attention to negative impacts of President Donald Trump’s efforts to use tariffs to force trade negotiations with a number of countries. The group previously said increased tariffs cost Wisconsin companies $139 million through October of last year.

Tariffs Hurt the Heartland worked with Trade Partnership Worldwide, a Washington D.C.-based consulting and trade analysis firm, to project the potential impact if the tariffs stay in place.

The projected loss of 2.2 million jobs comes under a “trade war” scenario that includes the existing tariffs on steel and aluminum, tariffs on all Chinese goods coming into the U.S., tariffs on automotive parts from a number of countries and retaliatory actions corresponding to each new tariff.

Laura Baughman, president of Trade Partnership Worldwide, said the projections use the same model the U.S. International Trade Administration and the Department of Congress use to evaluate trade deals and make recommendations regarding new tariffs.

If the trade war scenario were to stay in place, the tariffs and retaliatory actions would cut around 1 percent annually from U.S. gross domestic product and cost a family of four around $2,400 annually after a few years, the analysis found.

The potential impacts were less severe under a scenario that only included the announced tariffs and retaliation plus a 25 percent increase in tariffs on Chinese goods if the U.S. doesn’t reach a deal by March 1.

In that case, Baughman’s analysis found a 0.37 percent drop in GDP, a $767 increase in cost for a family of four and the projected loss of 934,700 jobs nationally. Wisconsin would lose around 14,100 under that scenario.

Under both scenarios, the manufacturing sector would see a net increase in employment, including around 236,000 nationally under the trade war projections. Those gains, however, would be offset by losses in the service sector, including a drop of 500,000 in wholesale and retail trade, another 330,000 in professional and business services.

The analysis found that while steel and aluminum jobs would increase, higher prices for consumers would lead to additional job losses. The report also noted manufacturing jobs could benefit as more production is forced back to the United States.

Sen. Ron Johnson

But U.S. Sen. Ron Johnson, R-Oshkosh, said that could hurt manufacturing employment over the long-term. He pointed out many manufacturers looking to export face pressures to produce overseas to be closer to end markets and the tariffs will increase the incentive to do that.

“The longer this trade war goes on … the greater and more permanent the damage done will be,” Johnson said at a Washington D.C. press conference organized by Tariffs Hurt the Heartland, adding the projections were “quite shocking.”

In his State of the Union address on Tuesday, Trump said he was working to reverse “decades of calamitous trade policies.”

“We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end,” Trump said in his prepared remarks.

Johnson and a bipartisan group of Senators, including Democrats Tom Carper from Delaware and Mark Warner of Virginia and Pennsylvania Republican Pat Toomey, acknowledged the need to address Chinese practices, but questioned the Trump administration’s methods.

“Our concern is really what the strategy is to achieve that goal and in particular the harm being done along the way,” Johnson said.

He also pointed out the administration had said measures like the steel and aluminum tariffs were intended to bring countries to the negotiating table. With the U.S. Mexico Canada Agreement or USMCA signed and awaiting ratification by Congress, Johnson said the administration should follow through on its pledge to lift the tariffs.

If the U.S. uses tariffs as leverage but does not remove them once agreements are in place the approach loses strength in future negotiations, he said.

Johnson also argued that wrapping up other negotiations could help in talks with China.

“If we can go to China as a united world, we have a much better chance,” he said.


Sign up for BizTimes Daily Alerts

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

No posts to display