UNITED STATES—With the United States and China locked in an escalating trade war, the question is, how is it affecting everyday Americans at home? US President Donald Trump has imposed three rounds of tariffs on goods imported from China, to the tune of over $250 billion. Everything from industrial to consumer goods have seen tariffs applied, with these duties reaching as high as 25% for the Chinese government. Although Trump’s protectionist approach is designed to put “America First”, there are states that have borne the brunt of Trump’s trade war with China.
Perhaps surprisingly, the price of the Dow Jones has held up well in recent months, which is so often used as a barometer for the overall performance of America’s most influential industries. One reason for this could be that trade wars have affected financial markets and global trade for generations, as the research below testifies:
However, Kristi Noem, governor of South Dakota, recently spoke out against Trump’s trade war with China, insisting that it had “devastated” South Dakota, a state that is heavily reliant on agriculture. Ms Noem said that, while trade wars affect the state’s farmers most, it has also had an impact on “every main street business” that “relies on a successful ag industry”.
There are many other US states that are vulnerable to this ongoing trade war with China. The likes of California, Washington and South Carolina are greatly at risk as they rank among the leading states that export to China. California looks particularly fragile given that it accounted for 13.53% of all American exports to China in 2018, second only to Texas.
A fifth of all Oregon exports are China-bound
It’s also worth noting that almost a fifth (19.5%) of all exports from Oregon currently go to China. Census data reveals that $3.5 billion worth of goods were exported from Oregon to China, so it is clear that jobs and finances rely heavily on the flow of these goods to the Far East. China has voiced its ambition to reduce its reliance on US-made computing and electrical components, which made up $2.1 billion of the $3.5 billion exported from Oregon in 2017. Meanwhile, almost 90% of the 87,000 Ford automobiles manufactured in Oregon were shipped to China.
Pause on US-China trade tariffs due to end this month
Since the US launched an official investigation into its existing trade policies with China, uncertainty has ramped up nationwide for American industries, but there may be light at the end of the tunnel. Although President Trump is seemingly keen to prove to China’s President Xi Jinping that he won’t be bullied, he did agree to halt new trade tariffs for 90 days in December, allowing for talks between the two nations on a future trading arrangement.
At the G20 summit in Argentina, Mr Trump and Mr Xi met to discuss their differences and the former agreed not to bump up tariffs on $200bn worth of Chinese goods from 10% to 25% from 1st January 2019. That agreement is nearing its end now and the clock is ticking for both sides to resolve their differences, otherwise, the heat may be turned up further once again.
There are signs that Trump may be diverting his trade attentions away from China towards India, with fresh threats to remove India’s exports from its tariff-free plans. Trump has warned that he is considering removing Delhi from the USA’s Generalised System of Preferences, ending the duty-free entry of Indian goods to the value of $5.6 billion.