STATEHOUSE REPORT |  ISSUE 24.10 | March 7, 2025
  • BIG STORY:  Trump tariffs lead to ‘stagflation’ concerns
  • MORE NEWS: S.C. House members get first look at 2025-26 state budget
  • LOWCOUNTRY, Ariail: Thanks, senator
  • BRACK: Skipping down Columbia’s craziness lane
  • MYSTERY PHOTO:   Brick fence
  • FEEDBACK: Just looking for truth
STATEHOUSE REPORT |  ISSUE 24.10 | March 7, 2025

Trump tariffs lead to ‘stagflation’ concerns

By Jack O’Toole, Capitol bureau  |  President Donald Trump’s on-again, off-again tariff announcements over the past six weeks have some experts using a dirty word most Americans haven’t heard since the darkest economic days of the 1970s.

Stagflation.

For those too young to remember, “stagflation” was the term coined to describe the rare and exceedingly painful combination of low growth and high inflation that plagued the U.S. economy after the price of oil rose roughly tenfold between 1973 and 1979. Put simply, Americans were getting poorer and prices were rising at the same time.

And economists say they’re starting to see similar conditions emerge today.

“Directionally, it is stagflation,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC this week. “It’s higher inflation and weaker economic growth that is the result of policy — tariff policy and immigration policy.”

University of South Carolina economist Joseph Von Nessen agrees that stagflation is a possibility, though he notes Trump’s tariffs have so far been negotiating ploys rather than fully implemented policies. For instance, in just the past week, Trump announced 25% tariffs on Mexican and Canadian goods — only to suspend them days later.

“Stagflation is a possibility, if we see tariffs as they’ve been proposed,” Von Nessen told Statehouse Report in a March 6 interview. “Because in that case, you’d be talking about a scenario in which tariffs would be putting upward pressure on inflation at the same time we’ve seen a pullback in economic growth.”

In fact, Von Nessen explained, just the threat of tariffs is contributing to that pullback, due to the climate of uncertainty it creates for businesses and investors.

“Uncertainty breeds paralysis, because it prevents businesses from being able to make long-run strategic decisions,” he said. “It causes them to go into wait-and-see mode, and can temporarily postpone investment decisions.”

It’s that mix of slowed investment and the possibility of higher prices due to tariffs that has economists talking about stagflation. And South Carolina’s economy, they say, offers a useful example of how it could happen.

Tariff impacts on S.C. factories and farms

To understand the impacts of tariffs, experts say it helps to demystify the subject by calling them what they really are: taxes on imported goods. So if a 25% tariff were imposed on, say, Canadian lumber, which is widely used in the U.S. market, that tax would be passed on to consumers in the form of higher prices for lumber-intensive products like houses.

But for S.C. factories and farms, which exported almost $40 billion in products around the world last year, from SUVs to soybeans, that’s only half of the story. The other half is the retaliatory tariffs foreign countries would then place on U.S. exports, creating a double-whammy for S.C. exporters: higher costs for the imported goods they use in their products, and higher taxes on those products when they reach global consumers.

“South Carolina is an export-oriented manufacturing state,” Von Nessen said. “So, any retaliatory tariffs would affect [exporters’] cost structure and demand for their products.”

But again, Von Nessen urges caution in assessing the impacts, noting that there would be winners in addition to losers if Trump’s tariffs were implemented. For instance, some investors might be tempted to expand S.C. production to serve the domestic market. 

Nevertheless, on balance, he says that higher tariffs would be likely to hurt more S.C. producers than they help.

“What economists have found historically is that the costs tend to outweigh the benefits by a wide margin,” he said.

Impacts on small businesses and consumers

While trade discussions tend to focus on major corporations in the Palmetto State like Boeing, BMW and Michelin, S.C. Small Business Chamber of Commerce President Frank Knapp says he’s most concerned about the state’s small retailers and manufacturers.

“Small businesses don’t have a voice in this, but we’ll probably incur the most financial harm,” Knapp told Statehouse Report on March 6. “They just don’t have the ability to absorb a massive tax increase, so they’ll have to increase prices, which most can’t, or cut employee hours and jobs.”

 And those employees, he notes, are also S.C. consumers, which means they’ll be facing higher taxes on everything from houses to cars to groceries at the same time they have less money to spend, slowing the state’s economic growth.

And that’s the same toxic mix that led to stagflation in the 1970s.

Still, Von Nessen warns against over-reading the moment, particularly given Trump’s tendency to walk back his most extreme policy announcements.

“We really just don’t know how this is going to play out yet or where we’re going to settle long-term on these tariffs,” he said. “But it’s fair to say that the larger they are and the longer they’re in place, the bigger the impacts will be.”

MORE NEWS

S.C. House members get first look at 2025-26 state budget

By Jack O’Toole , Capitol bureau  | Members of the S.C. House on Monday will start consideration of the $14.1 billion state budget, a document they’ve been reviewing for the last week or so.  

A generation ago, budget debate was hot, often lasting three or more days, and sometimes into the night.  But in recent years as the chamber’s Republican supermajority has grown, debate has been relatively tepid, with the billions in spending passing in a day or two.

In advance of next week’s floor debate, House members received a budget presentation Thursday that outlines 2025-26 funding priorities by the House Ways and Means Committee.

According to the presentation, the proposed budget reflects three major committee objectives: “meaningful tax cuts,” “smart investments” and “responsible budgeting.” 

Cuts. The proposed budget includes more than $1 billion in tax relief, with $211 million in income tax cuts and $814 million in property tax reimbursements.

Investments. The committee is recommending a $1,500 a year pay increase for public school teachers, bringing the state’s minimum salary up to $48,500 — still $1,500 short of Gov. Henry McMaster’s requested $50,000. Other highlighted investments include new dollars for disaster relief, behavioral and home health care, school resource officers and state roads and bridges.

Responsibility. The proposal also recommends limiting the now seven-year old “tuition-freeze” at state colleges and universities to existing students, raising health insurance premiums for state employees by $34 a month and adding more than $100 million to the state’s “rainy day” funds, bringing their total value up to just over $1.2 billion.

The House is expected to take up “non-controversial” budget items first  — that is, those without floor amendments — on Monday. 

Measure passes first hurdle to stem liquor liability crisis

Ever since S.C. liquor liability insurance premiums started spiking in 2020 — forcing an increasing number of small bars and restaurants out of business — Statehouse observers have wondered whether lawmakers would use the crisis to push through a sweeping “lawsuit reform” bill, or craft a narrower fix for the immediate problem.

On Thursday, a unanimous S.C. House came down firmly on the “narrow” side of that debate, even as the S.C. Senate appeared to kill a broad lawsuit reform bill sponsored by Sen. Majority Leader Shane Massey (R-Edgefield).

House leaders quickly touted their approach in a statement after the vote.

“This is a targeted, effective solution that businesses support and need now,” House Judiciary Committee Chairman Wes Newton, R-Beaufort, said after the vote. “A similar bill passed the House last year, but the Senate refused to take it up. We addressed the concerns raised, built consensus with stakeholders, and delivered a more comprehensive bill that will provide real relief while maintaining accountability in alcohol service.”

According to House leaders, the bill “quickly and directly addresses the liquor liability crisis” with several targeted actions, including:

  • An end to joint and several liability for alcohol sales: Under the House bill, bar and restaurant owners who are found to be 1% responsible for the harm caused by a drunk driver could no longer be forced to pay 100% of the damages. 
  • Creation of a liquor liability risk mitigation program: Bars and restaurants would be incentivized to adopt responsible alcohol service policies to lower their insurance premiums.
  • Mandatory training: All servers and managers would be required to complete state-approved training to serve alcohol responsibly and recognize the signs of intoxication.

In addition to passing their own narrowly-focused legislation, House leaders announced the formation of a new committee to consider larger reforms to S.C.’s liability laws — a strong signal, according to one Statehouse insider, that members have no appetite for sweeping changes.

In that vein, freshly-installed Committee Chairman Bill Herbkersman, R-Beaufort, noted members would be taking their time to make sure S.C. lawsuit reform efforts don’t end up mirroring Florida’s 2023 legislation — a law that Massey’s bill is often compared to. 

“South Carolina will take a deliberate approach, hearing from all sides before considering broader reforms,” Herbkersman said in a statement. “This committee will ensure we’re learning from other states, particularly Florida, to avoid unintended consequences and create meaningful, long-term solutions.”

On the other side of the Statehouse, Massey expressed frustration when senators refused to kill an amendment that would effectively gut his bill.

“We’re done,” he told his colleagues after the vote. “It’s over. Congratulations, y’all, it’s done. There will be businesses closed now because of this.” The House bill will move to the Senate next week.

Next week in the S.C. Statehouse

The S.C. House will reconvene on Monday to begin debate on the 2025-26 state budget. The Senate will return the next day for regular business. At press time, only two committee meetings are scheduled, both on the Senate side: a Finance subcommittee hearing to receive testimony from the S.C. Forestry Commission and the State Ports Authority, and an Education subcommittee hearing on the Educator Assistance Act, a bill that advocates say addresses longtime teacher concerns regarding contracts, recertification requirements and district administrative procedures.

In other recent news

How’s S.C.’s execution by firing squad will unfold. It will be three volunteer prison employees holding rifles about 15 feet away who will complete condemned killer Brad Sigmon’s punishment in what will be the United States’ first firing squad execution in 15 years.

GOP leaders call on S.C. reps to wait on total abortion ban. Republican legislators re-opened debate Tuesday on another attempt to ban nearly all abortions in South Carolina, carrying out a promise by the House’s most strident abortion foes. But House Majority Leader Davey Hiott, R-Pickens, said in a statement for the House to wait on the Supreme Court’s ruling on the state’s 2023 law that outlaws abortions at six or nine weeks of pregnancy.

S.C. unemployment benefits could be increased for first time in decades. The state Department of Employment and Workforce announced in February it would increase the state’s maximum unemployment insurance benefit to $350 a week, marking the first real increase within the program in nearly two decades.

S.C. Senate advances bill banning vaccine mandates. An S.C. Senate panel gave its blessing to legislation that would prohibit vaccine mandates by public and private employers, after limiting its scope to “novel” vaccines that have not received full FDA approval. Gov. McMaster has called the bill “unnecessary.”

S.C. anti-DEI bill would mandate sweeping changes in public, private sectors. An S.C. House bill to eliminate diversity, equity and inclusion initiatives would bar state and local governments from doing business with any entity with DEI policies, including major Palmetto State manufacturers like BMW, Michelin and Bosch.

S.C. Senate considers harsher penalties for human trafficking. A bill to make prostitution and coercion felonies under S.C. law is moving through the S.C. Senate, where sponsors expect it to be approved overwhelmingly. “I think it may be a unanimous vote,” said Spartanburg Republican Sen. Josh Kimbrell. “I can’t imagine anybody who doesn’t agree. Ultimately, we should protect these victims and go after people who victimize them.”

S.C. senators trying again to create vaping registry. A bill in the S.C. Senate would create a registry of vapes and e-cigarettes that are allowed to be sold in the state based on those that have approval or pending approval from the Food and Drug Administration.

S.C. bill punishes organized thievery passes unanimously. Thieves who work together to steal thousands of dollars’ worth of merchandise from South Carolina businesses would face stiffer penalties under legislation approved unanimously by the Legislature.

Students removed from S.C. voucher program after being deemed ineligible. About 1,000 students were kicked out of the state’s school voucher program in October, months after participating students had received the first of four $1,500 scholarship payments, but before the second round of funding. The S.C. Department of Education found them ineligible, according to an oversight report.

LOWCOUNTRY, by Robert Ariail

Thanks, senator

Award-winning cartoonist Robert Ariail has a special knack for poking a little fun in just the right way.  This week, he takes on how U.S. Sen. Tim Scott, R-S.C., recently “helped” banking consumers by aligning with banks, not consumers.

COMMENTARY

Skipping down Columbia’s craziness lane

Credit: Pixabay

By Andy Brack  | About this time every year, the South Carolina General Assembly has been in session long enough to figure out the craziness trajectory of the year.

Brack

On a scale of 1 (not crazy) to 10 (nutso), this year is probably a 7.  But lawmakers still have three months left to startle, amaze and polarize us.

Right off the bat is the Republican obsession with diversity, equity and inclusion, which they minimize by using yet another acronym, DEI.  For some reason, creating opportunities for all and treating people fairly has become an anathema to the mostly-white, Christian nationalist Republican party.  

Making headlines these days is a bill that would prohibit state agencies, including colleges and universities, from “promoting diversity, equity and inclusion.” And while that may sound ominous but not horrible, it is, in fact, Orwellian in that it would keep all government bodies in the state, including city councils and school districts, from “contracting with any company with DEI programs. Even the subcontractors would have to certify they don’t operate such programs,” according to one analysis.

What’s really crazy is to think about what that actually means – state agencies that work to bring big companies to the state couldn’t actually do business with those companies if they have DEI policies.  And state and local governments also couldn’t do business with existing in-state powerhouses like BMW, Michelin, Milliken and Bosch.  Although more than 70 of the House’s 88 Republicans are co-sponsors, the bill’s trajectory is unclear as a House committee took no action on March 4 after five hours of testimony that mostly opposed the measure.  Perhaps something less onerous will result.

Meanwhile the House continued its annual tradition of trying to outdo itself on abortion.  Some GOP lawmakers are pushing now for what amounts to a total abortion ban, without exceptions for rape and incest  – even though leaders of the Republican caucus are asking them to slow down and wait to see what courts say about the constitutionality of a similar measure under consideration.  If you’re trying to understand what’s going on, the argument highlights a schism in the GOP in which uber-conservatives are looking for ways to tar and feather more moderate Republicans to get culture war votes to pillory fellow caucus members on the 2026 campaign trail.  

Next on the legislative list is the continuing plea by bars and restaurants for lawmakers to do something about the skyrocketing cost of liquor liability insurance that is putting some of them out of business.  

State senators, who have been fiddling unsuccessfully with solutions for a couple of years, are considering one broad measure that would “reform” the state’s tort system – even though they’ve messed with that for two decades to take away regular people’s rights to recover in myriad ways.  

But that measure may be on life support, the S.C. Daily Gazette reports, because it deals with too many issues.  The S.C. House this week approved a narrower measure focused on places that serve alcohol.  GOP House leaders also said they’d form a study committee to deal with the bigger issues – a signal that they’ll fight over the scope of any big bill from the Senate.

As conservative officials in Washington mess with the scope of government by fiddling with everything from national parks and foreign aid to tariffs that are expected to make things cost more, be on the lookout for Columbia lawmakers to govern in the same spirit.  Already being discussed are so-called government efficiency measures, an anti-vaccine mandate, reshaping charter school guidelines, book bans and more.  

Meanwhile, protests are picking up – with more than 500 people gathering in early March in Charleston to rail against harsh federal proposals and scores more who lined up to attend an abortion bill hearing in Columbia.

Maybe the GOP in South Carolina soon will start remembering its own wails and moans from a generation ago when conservatives thought less government intrusion in people’s lives was better.  Wouldn’t that be radical?

Andy Brack is editor and publisher of Statehouse Report and the Charleston City Paper.  Have a comment?  Send to feedback@statehousereport.com.

MYSTERY PHOTO

Brick fence

Here’s an old brick fence somewhere in South Carolina.  Where is it?  Bonus points:  What is it?  Send your name, hometown and guess to: feedback@statehousereport.com.  

Our most recent mystery, “Another bridge,” shows an Interstate 95 bridge over the Coosawhatchie River in Jasper County.  Eagle-eyed spotters, like Allan Peel of San Antonio, Texas, will recognize it as a mystery from 2014.  

Others who identified the bridge were: Curtis Joyner of Charleston; David Lupo of Mount Pleasant; Elizabeth Jones of Columbia; George Graf of Palmyra, Va.; and Don Clark of Hartsville.

  • Send us a mystery picture. If you have a photo that you believe will stump readers, send it along (but  make sure to tell us what it is because it may stump us too!)  Send to:  feedback@statehousereport.com and mark it as a photo submission.  Thanks.
FEEDBACK

Just looking for truth

To the editor:

Excellent article. I think normalization by the media started during Reagan’s presidency. With the current resident, it’s just gotten worse and worse. It doesn’t help when the major networks are owned by his supporters. 

I have turned to overseas and Independent media for my news. No lies, just truth. 

– Parker Brown-Nesbitt, Summerville, S.C.

Editor’s Note:  Thanks … except for Statehouse Report, we hope!

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  • Have a comment?  Send your letters or comments to: feedback@statehousereport.com.  Make sure to provide your contact details (name, hometown and phone number for verification.  Letters are limited to 150 words.
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