ICYMI: As POTUS Visits Houston, Tariff Data Highlights Cost of Trade War for Texas

WASHINGTON – President Donald Trump will visit Texas this evening, just days after the Dallas Morning News reported that the trade war has already cost $654 million in the Lone Star State. Before the President rallies in Houston tonight, be sure to check out this report about how his trade policies are causing pain across the Texas economy – pain that won’t stop unless the trade war comes to an end.

Texas Companies Paid $654M More in Tariffs This Summer Than the Last Amid Trump’s Trade War

Dallas Morning News

By Tom Benning

October 18, 2018

WASHINGTON — Texas companies paid $654 million more in tariffs in June through August than in the same three-month stretch the year prior, a 142 percent increase that comes as a direct consequence of President Donald Trump’s sprawling trade war.

That’s one of the major findings in an analysis released Thursday by the Tariffs Hurt the Heartland campaign, a national coalition of business and farm groups.

The startling jump in import levies jibes with the impact that’s been reported anecdotally by Texas businesses over the last several months as Trump has imposed tariffs on washing machines, solar panels, steel and aluminum, and an enormous list of goods produced in China.

Affected businesses may be forced to reduce investment and hiring as a result, while consumers could end up feeling the pinch by way of higher prices.

“This affects our bottom line,” said Texas Ale Project president Kat Thompson, explaining how the aluminum tariffs are hitting her company’s beer cans. “You may think, ‘OK, a one-cent increase on a can, whoop-de-doo.’ But it adds up real fast when you’re talking about 100,000 cans.”

Texas has been on the front lines of Trump’s trade war from the start, thanks to a trade-heavy economy that features strong ties to Mexico, Canada and other commercial hubs.

In addition to the duties Trump has put on goods coming into the U.S., Texas farmers, ranchers and other businesses have suffered due to retaliatory tariffs from countries across the globe that now cover billions of dollars in Lone Star State exports.

While Texas lawmakers in both parties have generally pushed back against Trump’s tariffs, the president has threatened to enact even more.

Trump has cited the levies as an effective way to gain leverage over America’s trading partners and get better deals for the U.S. He made that case, for instance, while touting the accord the U.S. reached late last month with Canada and Mexico on a new North American Free Trade Agreement.

“Without tariffs, we wouldn’t be talking about a deal,” he said then, referring to what he’s calling the U.S.-Mexico-Canada Agreement. “Just for those babies out there that keep talking about tariffs. That includes Congress.”

The Tariffs Hurt the Heartland campaign, as its name suggests, is unabashedly opposed to the import levies. But its new analysis, compiled by the Trade Partnership, was done using publicly available national and state-level trade data collected by the U.S. Census Bureau.

The findings reflect common sense: The amount of levies paid jumps when there are more tariffs.

It does take some time for the tariffs to really take hold, thanks to complex supply chains and the fact that Trump has imposed the duties in stages. But the data shows clear increases in tariffs paid starting in June, both in Texas and across the U.S.

Some of that bump can be explained by a simple increase in the value of imports, though tariffs tend to have ripple effects beyond just the goods they cover.

But even when isolating the data to just the products now subject to Trump’s tariffs, Texas companies paid $494 million more tariffs in June through August than in the same three-month stretch the year prior, the Tariffs Hurt the Heartland analysis found.

That amount is relatively small compared to the $263 billion in imports that Texas received last year overall. Trump administration officials have pledged that some short-term pain will lead to a long-term gain, pointing to renewed trade talks with Japan, the European Union and others as proof.

And some sectors have hailed the protectionist moves — with Trump pointing out that the steel industry, including in Texas, has announced additional hiring in the tariffs’ wake.

“One of things we’re most proud about is what’s happened with our steel industry. Our steel industry was dead. … It was dead as a doornail,” said Trump, who often adds that the health of America’s steel sector is a matter of national security. “Steel is through the roof now.”

But the tariff costs can add up in a meaningful way for a wide range of industries, since the levies cover everything from appliances to furniture to car parts to Christmas lights to coffins.

Texas’ oil and gas sector, for instance, has bemoaned the effect that the steel tariffs are having on pipeline construction and other activity. Texas’ semiconductor industry has said the levies on Chinese goods mean that they end up paying tariffs on their own products.

Some Texas businesses, particularly in the retail sector, rely heavily on imports.

“Unfortunately, the current tariff list impacts around 85 percent of the products we sell in our store,”  Tiffany Williams, owner of the Luggage Shop in Lubbock, said Thursday at an event organized by Tariffs Hurt the Heartland at Texas Ale Project’s brewery in Dallas.

Texas farmers and ranchers, among others, are feeling the other side of that burn. Retaliatory tariffs imposed by China, Canada, Mexico and the EU make those Texans’ goods more expensive in foreign markets, with key exports like grain sorghum, pecans and cotton taking the hit.

While the Trump administration has launched a program to provide $12 billion in emergency aid to farmers and ranchers harmed by the trade war, the agricultural community remains concerned.

“Agriculture is bearing the brunt of these retaliations at a time when we can least afford it,” said Scott Frazier, a South Texas farmer and rancher who explained that he’s personally seen grain sorghum shipments from the Port of Corpus Christi to China plummet in recent months.

When and how all of this reaches consumers is an open question.

Some businesses may be able to eat the added costs. Others will not, and prices have already starting increasing on washing machines, refrigerators, outdoor grills and other items that include lots of steel or aluminum, according to government data and anecdotal reports.

But there is no doubt that the issue has the attention of Texas politicians, with trade emerging as a key issue in the high-profile Senate race between Sen. Ted Cruz and Rep. Beto O’Rourke.

While both candidates have expressed their displeasure with Trump’s tariffs, they’ve sparred over how best to handle the matter. Cruz, a Republican, has said that he, unlike O’Rourke, has a relationship with Trump and is able to push the president to reduce trade barriers.

“I have made the case repeatedly to President Trump that in trade we should be expanding our access to foreign markets,” he said Tuesday during a televised debate in San Antonio, citing Trump’s deal on a new NAFTA as a success.

O’Rourke, a Democrat, countered by accusing Cruz of being “all talk and no action.”

“If you have this special relationship with President Trump, then where is the result of that?” he said.

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