Charleston City Paper
July 26, 2024
Trump policies could place S.C.’s trade at risk, experts say
by Jack OToole
Former President Donald Trump effectively doubled down on the populist tariff and immigration policies that helped fuel his surprise victory in 2016 by choosing Ohio Sen. J.D. Vance as his running mate at last week’s Republican convention. And according to political and economic experts, that selection is likely to play particularly well among working-class voters in the critical swing states of the nation’s industrial Midwest.
“J.D. Vance’s story will resonate with blue-collar workers in the ‘Blue Wall’ states of Michigan, Wisconsin and Pennsylvania,” Winthrop political scientist Scott Huffmon told the Charleston City Paper in an interview this week. “Trump needs to flip at least one of those, and that’s one of the big reasons he picked Vance over the others.”
S.C. Gov. Henry McMaster also believes Vance has strong appeal.
“I think J.D. Vance is perfect,” McMaster told Forbes from the convention floor just moments after the choice was announced. “They think alike, they like each other and they want to take the country in the same direction. I think they’ll be a great, great team — maybe the perfect team.”
But back in the Palmetto State where the economy is booming thanks largely to free trade, foreign investment and flexible labor markets, business leaders and experts are beginning to wonder what price South Carolinians could wind up having to pay for Trump’s Midwest-friendly politics.
“Over the past five decades, the Southeast has really been subjected to the forces of free trade, and as a result we’ve become very resilient and competitive in the global marketplace,” said Russell Sobel, a professor of economics and entrepreneurship at The Citadel. “So we’ve really benefited from that, as opposed to some other regions that haven’t historically been as consistent with lowering the cost of business.”
In short, South Carolina has worked hard to become a winner in the global economy, with international companies like BMW, Michelin and Samsung now beating a path to its door. And that makes the question of how Trumponomics would impact Palmetto State businesses and workers become a critical issue for South Carolinians in this year’s presidential contest.
Trouble ahead?
When people say South Carolina’s economic boom is inextricably tied to global commerce, they have the numbers to back it up.
According to state and federal statistics, South Carolina exported $37 billion in goods like cars, tires and appliances to foreign markets in 2023 — a 42% increase over the past decade. Almost 600,000 South Carolinians, or 20% of the workforce, hold jobs directly linked to trade. And at last count, more than 6,500 S.C. businesses actively exported their goods and services to customers all over the world.
Experts say Trump’s proposed 10% across-the-board tariff, coupled with his suggested tariff of 60% on Chinese goods, could threaten South Carolina’s success in three principal ways.
First, it could invite foreign countries to retaliate with tariffs against U.S. goods, placing the state’s $37 billion in international trade at risk.
“Anytime you implement a tariff, you always open yourself up to retaliatory tariffs from other countries,” said Joseph Von Nessen, an economist at the University of South Carolina’s Darla Moore School of Business. “That’s a risk that would emerge.”
That said, Von Nessen stressed the risk would depend on the exact nature of any tariffs a future President Trump ultimately decided to implement.
“Not all tariffs are created equal,” he said. “They have to be examined on an industry-by-industry and case-by-case basis.”
The second major concern involves tariff-inflated prices, which the nonpartisan Petersen Institute for International Economics estimates would cost the average South Carolina family $1,700 per year.
“The scale of trade barriers proposed by candidate Trump is unprecedented,” according to Petersen’s May 2024 report. “Studies convincingly find no evidence of terms-of-trade benefits for the United States from these tariffs. Rather, the data show that higher tariffs are fully reflected in higher prices for U.S. buyers.”
These increased costs, experts say, would have an outsized impact in South Carolina, where despite progress in recent years, incomes remain well below the national average.
Finally, the proposed Trump tariffs would hit South Carolina’s small and medium-sized businesses — which represent 85% of Palmetto State exporters — with particular force.
“Tariffs aren’t the answer, and they never work for their intended purpose,” said S.C. Small Business Chamber of Commerce President Frank Knapp. “[Instead], they hurt small businesses “that benefit from trade.”
Immigration restrictions and the specter of inflation
The other aspect of Trumponomics that concerns experts is the potential impact of large-scale migrant-worker deportations on the state’s labor market.
“Any reduction in immigration for any reason reduces the supply of labor and that puts upward pressure on wages,” USC’s Von Nessen said. “And we are already in a very tight labor market, particularly in South Carolina.”
And once again, small business leaders say they would be hardest hit, at least initially, by the resulting wage inflation.
“The number one problem small businesses in South Carolina cite is the labor shortage,” Knapp said. “You can’t pull workers out of the state without forcing businesses to raise pay — and small businesses aren’t in a position to do that.”