Trump could use some tariff target practice

Tariffs are taxes. There are no two ways of looking at it. With any tax, you have winners and losers. Some areas win, some lose. While the Port of Charleston set a single-month record in August for containerized cargo, South Carolina remains a manufacturing region, and Charleston relies heavily on that.

Any economist will tell you price uncertainty causes anxiety with manufacturers and the markets. For example, if my company is tasked with producing a certain amount of goods at a certain price, my quote will depend on the amount of raw resources going into production. If I don’t know the price of those resources, I can’t give you an accurate quote. Tariffs have created an uncertainty with manufacturers throughout the region. That becomes especially true with the biggest employer in the state, BMW, whose exports fell off in 2018 because the SUVs they build in South Carolina end up being too expensive in China.

Ian Scott, senior vice president of government relations at the Charleston Metro Chamber of Commerce, told me, “International trade has an outsized impact on the employment base and economic health of the Charleston region due to the concentration of exporting companies and global suppliers in the automotive, aerospace, and chemical sectors and because of the region’s significant logistics sector centered on the Port of Charleston.”

It’s no lie that the U.S. has trade deficits with some countries and trade surpluses with others. Many see President Donald Trump’s trade war, especially with China, as part of his negotiating strategy to correct this imbalance. And it might work as he anticipates. What happens, though, not only to our trading power in the international arena, but also to a region like ours that is dependent on trade? Because again, there are real world implications behind uncertainty, and those include job losses, which will have a trickle down effect on the hospitality industry, and so forth.

Many, including Trump, credit President Ronald Reagan with resurrecting the U.S. motorcycle and automobile industries against rising Japanese competition in the 1980s by imposing tariffs on Japan. Those tariffs were specific and strategic, not wide ranging. The Reagan tariffs did not force the federal government to subsidize farmers in the Midwest like Trump tariffs do. Reagan also changed the tax code, which companies could take advantage of if they developed new technologies, for example. This 1981 tax was renewed until it became permanent in 2015.

Every president has (hopefully) had the best interest of this country at heart. Some ideologies and policies have devastated us, and some have helped. American ingenuity to create and produce has always been our greatest strength to compete in the international marketplace. It is that marketplace, as well as tax incentives to manufacturers such as BMW and Boeing, that has led to the boom in South Carolina’s economy.

History might prove President Trump’s negotiating style was successful in rebalancing our trade imbalance. Many conservatives and advocates of free market economics, like myself, agree that a more targeted approach to the imbalance and fair free trade agreements would benefit American companies.

As Reagan said in 1983: “It’s a lesson history has taught us again and again. Protectionism hurts everyone, but free trade benefits all.”