Donald Trump, the Republican Party’s nominee for president, might be leading in the polls in South Carolina, but his economic positions on immigration and foreign trade would hurt the Palmetto State’s economy, experts say.
However, Sen. Hillary Clinton, the Democratic nominee, has softened her support for a major free trade deal as the campaign has progressed, they say. And free trade is perhaps the most important economic issue for South Carolina workers because the state is manufacturing heavy, export and import dependent and has one of the nation’s leading ports.
Like the majority of the America public, economists and business leaders interviewed are not overly enamored with either candidate. One economist even refused to comment because he felt the plans weren’t worthy of comment. But the majority of those interviewed feel Clinton’s proposed economic policies – particularly her call for comprehensive immigration reform – are more in line with South Carolina’s economic goals.
“Both candidates appear to be less focused on free trade relative to Obama, Bush – both W. and H.W. – Bill Clinton and Reagan,” said Mark Witte, College of Charleston economist and director of the school’s Master of Business Administration program. “And given that so much of South Carolina’s trade relations are with Europe, free trade is a big, big deal for workers here.”
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Witte added that Trump’s opposition to free trade deals that he deems poor might play well in the unionized rust belt, but don’t apply or are counterproductive to the growing manufacturing base in South Carolina.
We don’t have the same problem as other states (in the Midwest and Northeast) have. We’re not shipping jobs off to Mexico. Europe is shipping jobs here.
Mark Witte, College of Charleston economist
“We don’t have the same problem as other states” in the Midwest and Northeast, he added. “We’re not shipping jobs off to Mexico. Europe is shipping jobs here.”
The three pillars of South Carolina’s economy are manufacturing, tourism and agribusiness. All three would be negatively impacted by Trump’s positions on either free trade or immigration, economists say.
“Tourism and agriculture are the top two industries in the state,” said Joseph Von Nessen, an economist with the University of South Carolina’s Darla Moore School of Business, which is home to the nation’s leading international business program. “Manufacturing is not quite as large, but is right up there.”
Data from the U.S. Bureau of Labor Statistics and the U.S. Bureau of Economic Analysis compiled by Von Nessen show:
Manufacturing represents about 12 percent of employment in South Carolina, and contributes about $33 billion in gross state product
▪ Manufacturing represents about 12 percent of employment in South Carolina, and contributes about $33 billion in gross state product.
▪ Tourism represents approximately 13 percent of employment and $10 billion in gross state product.
▪ Agribusiness is about 6 percent of the state’s employment and $27 billion in gross state product.
Although economists say Trump’s policies would threatened the stability of the state’s main industries, a majority of South Carolinians – particular poorer whites in rural areas where jobs are scarce – still support him.
Raising tariffs? Lowing taxes?
Experts interviewed said that Trump’s stance on free trade – such as his opposition to the North American Free Trade Agreement and the Trans-Pacific Partnership, and his threats to raise tariffs against Mexico and China – could cost South Carolina jobs.
Clemson economist Scott Baier, interim chairman of the school’s John E. Walker Department of Economics, said, “The immediate impact would be on consumers and producers that use imported intermediate goods,” referring to parts used in the manufacture of other products.
In 2015, South Carolina imported more than $9 billion in goods from China and Mexico.
In 2015, he said, the state imported more than $9 billion in goods from China and Mexico.
“Many of these imports were used as intermediate goods,” he said. “If the state would have to turn to other suppliers, it would up the costs of doing business and may cost jobs in the state rather than create jobs.”
For example, nearly 50 percent of the nation’s auto parts are imported from Mexico and China, Baier said, and the port of Charleston is one of the leading destinations for those auto imports.
“In addition, you worry about a trade war where China and Mexico would raise tariffs on our goods,” he said. “This could reduce the market for our exports and slow job growth in South Carolina.”
Trump has said his tax plans, which would cut income taxes across the board and drastically lower corporate taxes to 15 percent from 35 percent, would spur job growth.
“You will find varying estimates on the economic impact of the two candidates’ plans,” Baier said. “The success of Secretary Clinton's fiscal plan depends largely on the faith that the government expenditures will help grow the economy and that the higher taxes on top income earners will have little impact on the how they choose to work and spend. For Mr Trump, the success of his plan depends on the belief that lower taxes creates the incentive for the private sector to create jobs and boost economic growth as well as Mr Trump's ability to reduce government expenditures.”
‘Our customers are in Europe’
Witte, the College of Charleston economist, said opposition to TPP by both Trump and now Clinton, as well as Trump’s threat to dismantle NAFTA, would have less impact on South Carolina than other parts of the country.
However, a future trade agreement with the European Union – an agreement called the Transatlantic Trade and Investment Partnership – could be a huge boost to the state, he said. But negotiations on that agreement have stalled because of opposition by some unions, charities, non-governmental organizations and environmentalists, particularly in Europe.
“It’s all about where your clients are,” Witte said. “Our customers are in Europe. If we have a free trade agreement with them, we’ll be able to export more to them” because the goods – mostly cars and tires – could be sold for a lower price.
Witte added that if Trump imposes tariffs on China and Mexico, trade would likely shift to other cheap labor countries like Vietnam, Indonesia, Bangladesh and India. That would having little impact on U.S. consumers, he said, “but inconvenience many multi-national firms.”
If we make it hard for (multi-national corporations) to compete, one of the things they will cut will be jobs
Republican consultant Chip Felkel
Republican consultant Chip Felkel of Greenville noted that those multi-national firms are driving South Carolina’s new manufacturing base – firms like BMW, Michelin, Boeing, Continental and Volvo.
“You’ve got a manufacturing community that is so critical to our economy,” he said. “If we make it hard for them to compete, one of the things they will cut will be jobs.”
Efforts to interview S.C. Commerce Secretary Bobby Hitt for this story were unsuccessful. However in a prepared statement he said:
“There are numerous factors that impact the global business environment. And, from a business perspective, South Carolina remains committed to ensuring that we maintain a business-friendly climate – one that provides our companies with the resources they need to succeed in marketplaces around the world.”
‘Keep them in the system’
Tourism and agriculture, the other two pillars of South Carolina’s economy, rely heavily on foreign workers, along with the vital construction industry.
Trump has made tougher immigration laws and coming down hard on illegal immigrants the bedrock of his campaign. Clinton has promised comprehensive immigration reform involving guest worker programs and a path to citizenship to allow illegal immigrants to keep working, but as yet hasn’t delivered any firm plan on how to do it.
“Clinton is making comprehensive immigration a priority, but we don’t know what those plans would look like,” Witte said. “Trump has been very audible about limiting immigration. But illegal immigration exists because legal immigration is so difficult.”
John Durst, president and CEO of the South Carolina Restaurant and Lodging Association, said his organization for years has joined state and national hospitality, agriculture and construction associations to call for immigration reform.
“And that appears to be consistent with the position Senator Clinton has taken,” he said.
Some mass exodus is not going to help this state
Republican consultant Chip Felkel
Felkel, the Republican consultant, added that Trump’s plan to deport illegal immigrants rather than create a way for them to continue working legally would have disastrous affects on the state.
“What has launched Trump for so many people is his pounding the table and saying he was the savior to fix immigration,” he said. “But some mass exodus is not going to help this state. Those small business people that run hotels on the Grand Strand or farm in the Pee Dee would be crippled.
“Yes, there has to be better enforcement of the laws on the books,” he said. “But we need a viable, prudent, logical solution. Register legally, make amends, pay a fine, go to the back of the line, but stay in the system.”
But the experts also noted that no president can implement immigration reform or create trade policy without the consent of Congress.
“A lot of what happens will depend on who controls the House and Senate,” said Baier, the Clemson economist. “While we often complain about gridlock, sometimes gridlock is a good thing. It can slow the implementation of bad policies or at lease allow us to rethink and formulate new policies that will likely lead to better outcomes.”
The candidates’ economic positions
▪ Trump would potentially place large tariffs on goods from China and Mexico, which represent 50 percent of the imports used to manufacture cars produced in South Carolina.
▪ Trump opposes the TPP and would repeal NAFTA if, he says, other countries aren't playing fair.
▪ Clinton helped negotiate TPP, but now she says she opposes it. She prefers small tweaks to the status quo in terms of foreign trade.
▪ Trump wants to build a wall to prevent illegal immigration, close the borders and has even suggested millions of illegals be deported.
▪ Clinton wants immigration reform which conceivably would make it easier for workers to come in legally and those already here to become legal.
▪ Trump opposes any pathway to legal status for those now here illegally, and has called for an end to “birth right citizenship” presently granted to anyone born in the United States regardless of their parents’ citizenship.
▪ Trump wants to lower taxes across the board, especially for the rich, and drop significantly taxes on corporate America. He would lower revenues over 10 years to $9.6 trillion, according to the Tax Policy Center’s study.
▪ Clinton would leave the middle class about the same and raise dramatically the taxes on the top 1 percent. She said her plan would increase revenues by $1.1 trillion a year.
▪ Clinton would raise from 40 percent to 45 percent the estate taxes on individuals who receive more than $3.5 million in inheritance and couples who receive more than $7 million. Trump would eliminate the so called “death tax.”