Manufacturers, homebuilders, military base supporters and health care officials were among those anxious Wednesday to see if Donald Trump’s election will improve South Carolina’s economy or result in unintended consequences.
The New York Republican’s statements during the campaign could mean lower taxes on industries and looser regulations on businesses that say such rules drive up their costs. But Trump’s policies also could raise costs for some manufacturers and consumers, said business people and analysts.
During the campaign, Trump pledged to lighten what many say is a regulatory burden that stifles economic growth. Many of those perceived obstacles are environmental rules, and include a plan to limit the release or greenhouse gases that contribute to climate change. Trump is a skeptic of climate change.
Trump also pledged to be a tougher trade negotiator than President Barack Obama. He blasted free trade agreements with Asia and Mexico, saying the United States was being taken advantage of by other nations in global trade. Changes to those agreements could cost manufacturers, although the full extent remains unclear, said Clemson University professor Scott Baier.
And Trump promised to repeal Obamacare soon after taking office.
Environmental regulations that homebuilders must follow are potentially on the chopping block when Trump takes office next year.
That could include rules to protect wetlands and control pollution.
A recent study by the National Association of Home Builders found regulations, impact fees and delays in gaining government approvals can drive up the cost of a new home by at least one-quarter, said Robert Dietz, chief economist with the national homebuilders group, while on a stop Wednesday in Columbia.
“It goes into the cost of a home and has to be passed along to the consumer, and obviously that hurts affordability,’’ Dietz said. “A President Trump administration could mean a rollback of some of the growth of those regulatory requirements.’’
Stewart Mungo, a long-time Columbia homebuilder who voted for Trump because of his conservative policies, said any flexibility on regulations would help keep home costs down.
South Carolina is studded with wetlands that he and other homebuilders need federal approvals for when they develop property. People who want to develop in wetlands usually need federal authorization because swamps and bogs are considered important to wildlife, while also controlling flooding in other areas.
Mungo said federal regulators often are less inclined to work with developers than state regulators on projects being built in South Carolina.
Mungo said rigid federal rules sometimes make it hard, even for local officials to compromise, he said. Mungo said he recently had to contribute to the cost of a sewage pump station at a development his company was putting together — because local government regulations required it. The cost could ultimately wind up at $400,000 if 100 homes are built, and that would be tacked on to the cost of a home, he said.
He and Dietz said the affordability of homes is a major issue, even as the economy has rebounded since the Great Recession of 2008.
However, Trump’s hard line on immigration could make it difficult for homebuilders to find labor. Deportations and a wall along the U.S.-Mexico border could exacerbate an already tight labor market.
Trump’s opposition to free trade deals could be costly to South Carolina businesses, even though his arguments during the campaign played well to voters in the Rust Belt, economists said.
Manufacturing, which represents about 12 percent of the state’s employment, contributes about $33 billion in gross state product. Imported material used by manufacturers in South Carolina could rise in price if a trade war breaks out with certain countries – and tariffs on certain goods increase.
“It raises the costs of our production, which could mean higher prices for consumers and potentially less employment,’’ said Baier, Clemson University’s interim dean in the economics department.
Mexico and China, for instance, supply the country with 50 percent of its auto parts. Increased imports from Mexico resulted when the North American Free Trade Agreement was adopted. The Port of Charleston is one of the leading places where these items are brought into the country.
Higher tariffs on China and Mexico could mean other countries, such as Vietnam, Indonesia and Bangladesh, would supply the material, but that could inconvenience many of the state’s multinational businesses.
Baier said changes in trade agreements could drive up prices for companies and consumers.
South Carolina is home to major corporations such as BMW, Michelin, Boeing and Continental Tire that export products overseas.
Baier said scrapping trade agreements might not be as easy as Trump might expect. Some members of his own party may oppose getting rid of agreements such as NAFTA or raising tariffs on certain countries, he said.
Thriving military bases
South Carolina’s eight U.S. military installations may have little to fear from a Trump Administration, and may, in fact, prosper, according to key military sources within the state.
Trump’s statements regarding the military have been “fairly general” but “mostly positive,” said Bluffton attorney Bill Bethea, who chairs the S.C. Military Base Task Force.
The task force is charged with supporting the state’s military bases and service members, in part by helping protect and expand missions at the states’ eight military installations.
“I have no reason to believe this new administration will adversely affect that presence,” Bethea said.
Trump said many times during presidential campaign the U.S. military needed to be rebuilt.
On Trump’s website, the first entry under his national defense vision is to “work with Congress to fully repeal the defense sequester and submit a new budget to rebuild our depleted military.” Sequestration is a federal budget control plan passed in 2011 that some say hurts the military more than it should.
The second entry is to increase the size of the U.S. Army to 540,000 active duty soldiers. Fort Jackson is the largest U.S. Army basic training center in the country.
Obamacare and other impacts
It wasn’t immediately clear how Trump’s vow to replace Obamacare would affect the healthcare industry in South Carolina. But only one insurer today is providing coverage through the Affordable Care Act. One question is whether a new health care system Trump has talked about would help insurance companies.
Lynn Bailey, a health care advocate, said South Carolina hospital emergency rooms could see a spike in business as people who lose health care coverage under Obamacare look for a place to gain treatment. Using emergency rooms for health care has been a practice common to people not wealthy enough to pay for their own insurance.
“So we would be back to where we were five years ago and health care has not gotten any less expensive,’’ she said, noting that she doesn’t believe Obamacare can be quickly repealed because it is complex and so closely tied to other federal health care programs.
The Charlotte Observer contributed to this story