SC Public Radio
December 6, 2024
SC businesses, consumers bracing for potential trade tariffs
President-elect Donald Trump has vowed that on his first day in office next month he’ll impose heavy tariffs targeting the United States’ three largest trading partners: Canada, Mexico and China.
Trade tariffs were the hallmark of then-candidate Trump’s economic plan to ramp up American manufacturing and to reduce inflation.
Dr. Joseph Von Nessen, a research economist at the University of South Carolina’s Darla Moore School of Business, said that Trump views tariffs as a strategy to help struggling communities in the U.S. that have seen manufacturing jobs relocate overseas in the last 10 to 20 years.
“He is looking at ways to potentially bring some of those jobs back, and help revitalize some of these communities,” Von Nessen said. “And depending on how the tariffs are implemented, and what the specific tariffs are designed to do, it’s possible to see more manufacturing investment in the United States.”
In understanding tariffs, Von Nessen said first consider them as a tax that American businesses would have to pay on goods the companies import into this country.
In South Carolina, giant companies like automakers BMW and Volvo, and smaller ones such as grocery stores, clothing stores, and companies that sell all types of consumer goods, rely on materials and goods they buy from overseas.
To afford the increased costs, tariffs could result in increases to consumers in the form of higher prices. Many national economists say that could lead to inflation.
South Carolina also is a major exporter of products.
Cars, textiles, tires and soybeans, for example, are produced in the Palmetto State and sold overseas. According to Von Nessen, American exporters could be adversely affected by countries implementing “retaliatory” tariffs.
“If you are an automotive manufacturer in South Carolina, and a bulk of your sales goes to consumers overseas, then what type of adjustment would you have to look to make?” he said. “You may have to look at whether you can pivot your production to service the European market or perhaps the American market, if we’re seeing retaliatory tariffs from China for example.”
South Carolina’s vibrant manufacturing sector relies heavily on components from overseas suppliers, which could certainly feel the impact of tariffs, stakeholders said. So could hundreds of smaller companies that import products, such as toys, electronics, clothes and furniture.
Frank Knapp, president of the S.C. Small Business Chamber of Commerce, said small businesses could have an even harder time turning profits if tariffs are imposed.
“They are already competing against big businesses that have the advantage of buying goods in quantity and paying less for them and the advantage of marketing,” he said.
Knapp added, “So what do small businesses have to do? Well, they have to raise their prices, but they may not be able to raise them to recoup all of that extra tax because they are in that competition.”
While Trump touts tariffs as his key economic strategy, he also sees them as a tool to pressure foreign governments. He’s proposed tariffs on Canada and Mexico in an effort to deal with the migrant population and illegal drugs coming into the country.
A Trump ally, U.S. Sen. Lindsey Graham, R-S.C., says he agrees with the president-elect on using tariffs as diplomatic weapons.
“Create carrots for allies, and sticks for bad guys,” Graham recently told reporters in Charleston. “We will do to you what you do to us. If you have a tariff on our products, we’re gonna put tariffs on your products. How can you argue with that? Tariffs as a tool to get people to do better, … count me in.”