South Carolinians' jobs and wallets are at risk in an escalating global fight over tariffs — which are taxes charged on products bought and sold internationally — state economists and leaders say.
The Trump administration has promised to slap new tariffs on a slew of Chinese goods beginning Friday. That move is expected to trigger an immediate increase in Chinese tariffs on products coming from the United States, including from one of South Carolina's bread-and-butter industries: automobiles.
South Carolina economists say the effects of the tariff war on South Carolina are still uncertain, but certainly not positive for a state that boasts a number of globally exporting manufacturers — including giants BMW and Boeing — and some 250,000 manufacturing employees across the state.
"The tariffs proposed appear to have few upsides for South Carolina," said Joseph Von Nessen, an economist at the University of South Carolina.
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"We live on trade in this state," said Frank Hefner, an economist at the College of Charleston. "Trade drives the Port (of Charleston). Trade drives a lot of our industry. ... Anything that reduces trade is not good for South Carolina."
Friday's new tariffs are one more battle waged in a budding international trade war, as President Donald Trump has said he will punish unfair international trade practices that hurt the United States by charging more to other countries for the goods they send here. The Trump administration already has levied higher taxes on imported goods including steel and aluminum, which some economic experts say is already backfiring on Americans.
In retaliation, countries around the world, including China, Canada and the nations of the European Union, have threatened to increase taxes on goods, including automobiles, coming from the U.S.
More than 579,000 South Carolina jobs depend on global trade, according to the U.S. Chamber of Commerce, which said in a recent report that South Carolina would be one of the hardest hit states in a tariff war.
"I think you could very likely see jobs lost over this, and I think you're going to see companies make decisions to move production to other markets," said Ted Pitts, president and CEO of the S.C. Chamber of Commerce, which represents and promotes businesses across the state. "BMW's not going to go away, but you'll see production shifted to other markets. ... And ultimately, South Carolina workers are going to be without jobs."
Officials from BMW and Volvo both have indicated that Trump's tariff war could mean fewer jobs in South Carolina.
BMW's manufacturing plant in Greer, near Greenville, is the company's largest in the world, employing more than 10,000 people and supporting tens of thousands of other jobs in its local supply chain.
Some of those jobs could now be at risk, the company said in a recent letter to U.S. Secretary of Commerce Wilbur Ross, as reported by Reuters.
Higher taxes on materials and parts used to make vehicles, and higher taxes on exporting vehicles to other countries (courtesy of retaliatory tariffs) "would substantially increase the costs of exporting passenger cars ... potentially leading to strongly reduced export volumes and negative effects on investment and employment in the United States,” BMW said in the letter.
Efforts by The State newspaper to reach BMW representatives were unsuccessful this week.
Anything that would hurt BMW could hurt the entire Upstate, which has seen immense benefits since the car company's debut there 24 years ago, said Spartanburg County Councilman David Britt.
"BMW has been the gift that keeps on giving," Britt said. "We've had over $17 billion invested in this county and created over 55,000 new jobs on the heels of losing over 25,000 jobs to the textile industry. ... BMW has been the lifesaver for Spartanburg and for the Upstate and South Carolina. All you have to do is look at the results.
"This tariff issue could be the foot on the neck of growth, and it could stop it. And then it affects jobs in the Upstate and South Carolina."
While job losses in the state are a possibility, Von Nessen said, a more likely reality will be fewer new jobs being created, as Volvo has hinted.
Volvo's lone U.S. plant is under construction in Ridgeville, in Berkeley County, where the first cars will roll off the assembly line later this year. The company has promised to hire about 4,000 workers by 2021.
But, “If you have trade barriers and restrictions, we cannot create as many jobs as we are planning to," Volvo CEO Hakan Samuelsson recently told Reuters.
With Volvo just starting to make its impact in the area, not all local leaders are worried about job prospects at the moment. Berkeley County Councilman Jack Schurlknight, who chairs the county's economic development committee, said he supports the president's trade tactics.
"There might be some growing pains in the short term, but in the long run, it will be to our benefit," Schurlknight said.
Beyond the possible effect on job numbers, South Carolinians could start to feel the burden of tariffs anytime they pull out their wallets, economists say.
The ripple effect of increased costs throughout supply chains ultimately will be passed on to consumers of all sorts of products.
"Think about all the goods that are made by aluminum and steel," Von Nessen said.
"If you disrupt those supply chains, it takes a while to recreate them," Hefner said.