Last week a rare moment of bipartisanship highlighted the profound impact of President Donald Trump’s trade policy on newspapers around the country. At the United States International Trade Commission on July 17, Republican and Democratic members of Congress voiced their alarm over how the preliminary tariff on uncoated groundwood paper used for newsprint has caused the price of newsprint to rise nearly 30 percent.
The commission was holding a hearing to consider whether the preliminary tariff imposed four months ago on paper coming from Canada should become permanent. As newspapers around the country, both small and large, are buckling financially from the weight of this tariff, unified voices in Congress made it clear: This tariff must end.
Republican Sen. Johnny Isakson of Georgia remarked: “The threat of losing the newspaper in this country is a tremendous threat to the First Amendment. … Printed newspapers remain a vital part of our country’s free press, which is a key component of our democratic governance and civic life. … At the local, regional and national level, these papers help us understand and provide necessary context to the events unfolding here at home and across the globe.”
According to the law of unintended consequences, the actions of people — and particularly of governments — always have effects that are unintended or unanticipated. This is a fundamental economic principle. However, according to one observer, “Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.”
We are seeing this observation play out in real time as tariffs are being put forward and enacted as a way to supposedly level the international trade playing field. Alabama and other states are paying a price for this, though, and if further tariffs are put in place the price can eventually become exceedingly high.
Fueled by the increasing production of such things as cars, aircraft components, paper, minerals and chemicals, Alabama exports for 2017 set an annual record, hitting a mark of $21.7 billion. Trade in Alabama is a big deal. Alabama exports have grown 21 percent since 2011 and 50 percent over the decade.
Mobile serves as the gateway for shipments that go out to 189 countries, with Canada, China, Germany, Mexico and Japan, in that order, the top five recipients.
Likewise, Alabama imports totaled around $23.6 billion for 2017. Again, another significant dollar amount, with Mobile serving as the entryway for imports coming chiefly from South Korea, Germany, Mexico, Canada and China. The tens of billions of dollars in trade taking place in Alabama supports close to 600,000 jobs throughout the state. As a result, many Alabama families are beneficiaries of the high volume of exports and imports constantly on the move throughout the state.
Yet one of the unintended consequences of putting “America First,” by engaging in the implementation of tariffs, is that this powerful economic growth engine and jobs creator that international trade is in Alabama could become seriously imperiled.
As can be seen by the above data, the very countries that are being threatened with tariffs or already have tariffs levied against them are the very same ones that are Alabama’s top trading partners.
In retaliation for tariffs levied against them, China has slapped a 25 percent tariff on U.S. soybeans exported to China. On the list of the top 25 Alabama exports, soybeans come in at number 15. The state produces around 400,000 acres of soybeans each year and the soybean industry employs more than 100,000 people throughout the state. The effects of this retaliatory tariff on the state could be profound.
Alabama political and business leaders are anxiously waiting to see whether the administration will impose a 25 percent tariff on foreign cars, trucks and auto parts. Not including the new Toyota-Mazda plant that’s estimated to bring in 4,000 jobs, currently Alabama’s automotive manufacturing sector employs almost 40,000 people. Alabama vehicle exports in 2017 totaled nearly $8 billion. Automotive manufacturing has grown so much in Alabama the state has become the nation’s third-largest automobile exporter. We’re in the top three of a national ranking for something besides football.
But if the 25 percent tariff is imposed and the nations we target respond in like fashion, the impact on Alabama’s automotive manufacturing sector could be profound — in a negative way.
As the gateway for the flow of goods in and out of the state, Mobile stands to take an economic hit as well if there is a significant downturn in international trade in the state.
Trade wars aren’t good, nor are they easy. If the country is thrust into one, an unintended consequence could be Alabama becoming one of its casualties.