Tariffs could cost Minnesota 16,100 jobs, free-trade group says

A new report said the state will lose 16,100 jobs if the trade war continues.

February 7, 2019 at 7:02AM
In this July 18, 2018 photo, soybean farmer Michael Petefish holds soybeans from last season's crop at his farm near Claremont in southern Minnesota. American farmers have put the brakes on unnecessary spending as the U.S.-China trade war escalates, hoping the two countries work out their differences before the full impact of China's retaliatory tariffs hits American soybean and pork producers. (AP Photo/Jim Mone)
In this July 18, 2018 photo, soybean farmer Michael Petefish holds soybeans from last season's crop at his farm near Claremont in southern Minnesota. China has placed 25 percent retaliatory tariffs on certain U.S. products, including soybeans. (The Minnesota Star Tribune)

WASHINGTON – Tariffs applied to imports by the Trump administration and retaliation to them will kill hundreds of thousands of U.S. jobs, raise household expenses by hundreds to thousands of dollars a year and slow national economic growth if they continue. That's the message of a newly released study commissioned by tariff opponents.

The Tariffs Hurt the Heartland campaign released the study on Capitol Hill Wednesday with support from four U.S. senators, two Republicans and two Democrats. It was another volley in an escalating economic policy fight pitting American multinational businesses that believe in a global economy against an administration using punitive levies on foreign companies to get U.S. businesses and consumers to buy American.

Tariffs Hurt the Heartland is a coalition of trade groups and agriculture groups whose member companies include such major Minnesota businesses as 3M, Cargill, Target Corp. and Best Buy, as well as Farmers for Free Trade, which includes Minnesota members, and the Minnesota Retail Association.

The study predicted a net loss of more than 934,000 U.S. jobs — including 16,100 in Minnesota — over the next one to three years if current tariffs stay in place and certain threatened escalations occur. The reason for the job losses, said the study's author, Laura Baughman, is that eight jobs are lost for every job created by tariffs.

"Tariffs support protected industries," Baughman said. "But they reduce corporate and household spending. The negatives vastly outweigh the positives."

Current 10 percent tariffs on $200 billion in Chinese goods are set to rise to 25 percent on March 1 without an agreement between the U.S. and China. The March 1 bump should spur more retaliatory tariffs by the Chinese, who already placed 25 percent retaliatory tariffs on certain U.S. products, including soybeans. Meanwhile, U.S. tariffs remain on most foreign steel and aluminum, which the administration says is necessary for national security.

A worst-case scenario that Baughman calculated included the March 1 bump, plus Trump placing 25 percent tariffs on all goods imported from China. That, she said, would reduce the U.S. gross domestic product by 1 percent a year, cost a family of four $2,300 a year and produce a net loss of 2.1 million U.S. jobs.

The White House insists the hardball tariff tactics are necessary to stop China from stealing U.S. intellectual property and forcing U.S. businesses to give up trade secrets in order to do business in the world's second-largest economy. An assistant presidential press secretary referred the Star Tribune to the U.S. trade representative's office for comment on the study released Wednesday. The trade representative's office did not immediately respond.

In his State of the Union address Tuesday, Trump touted the creation of U.S. manufacturing jobs as a result of his trade policies. On Minnesota's Iron Range, Republican Rep. Pete Stauber was so happy with job gains in the mining-rich district he represents that he co-sponsored a bill giving the president more power to impose tariffs without congressional approval.

Meanwhile, conservative and liberal economists warn of the mutually destructive nature of trade wars. For example, no matter where the metal is made, prices for Minnesota businesses using steel and aluminum have increased by double digits since the tariffs were imposed, studies show.

Appearing at the news conference for the new study's release, Sen. Pat Toomey, R-Pa., an outspoken critic of the metal tariffs, told reporters that while figures in the Tariffs Hurt the Heartland study were extrapolations, the attempt by President George W. Bush to use tariffs as a trade negotiating tool produced a verifiable loss of nearly 200,000 American jobs.

Minnesota soybean farmers who depend on sales to China are suffering from a double whammy of natural and man-made problems. Bad weather and oversupply had driven down prices before the tariffs hit. Minnesota soybean sales to China dipped to near zero in November 2018.

The Consumer Technology Association, a trade group for the tech industry, reported in December that "tariffs on imported Chinese products now cost the technology industry an additional billion per month."

The retail industry may have the most to lose because so much of its inventory is made in China. A spokeswoman said Target sent two "subject matter experts" from its Minneapolis headquarters to Washington to participate in a lobbying effort Tariffs Hurt the Heartland coordinated with its study release.

Bruce Nustad, president of the Minnesota Retailers Association, said distress runs the gamut.

"We hear concerns across the board," Nustad said. "… Retailers understand the importance of reviewing and addressing our nation's trade agreements. However tariffs have a negative impact on retailers and Minnesota's consumers. Retailers in Minnesota are already feeling the impact now, and worry that the longer the tariffs remain in place, the deeper the impact will be."

Jim Spencer • 202-662-7432

about the writer

Jim Spencer

Washington Correspondent

Washington correspondent Jim Spencer examines the impact of federal politics and policy on Minnesota businesses, especially the medical technology, food distribution, farming, manufacturing, retail and health insurance industries.  

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