The Impacts of the Trump Tariffs on Virginia’s Economy
As I work on Monday night to identify the potential impacts that Virginia will face with the Trump Tariffs, I know that – by Tuesday morning – my comments may be completely outdated. Given the hourly waves of chaos and the many “executive orders” that have no basis in law, the scope of these impacts is difficult to fully grasp.
Just today, Donald Trump threatened China with an extra 50% tariff on its goods if China does not withdraw the 34% counter-tariff it is imposing on American products. China’s counter-tariff was declared on Sunday in response to Trump’s “Liberation Day” 34% tax on Chinese imports. In addition to China, just about every country that supplies goods to the US has been affected by at least a minimum of 10% tariffs. These are taxes that American businesses and industries will pay on goods and that will be passed on to American consumers.
What can we expect from the Trump Tariff/Tax policies on imported goods? All leading economists point to the fact that we will soon be paying higher prices in every sector of the economy. Electronics, clothing, cars, food, and other daily consumer products are expected to see price hikes. We should also expect to see economic disruptions, particularly in manufacturing, agriculture, and construction.
Additionally, the countries affected by these tariffs may soon respond, as China has done, with retaliatory tariffs on American goods. American farmers, manufacturers, and exporters will likely see steep declines in their ability to export their products. Such declines often lead to job losses; small businesses struggle to survive when the cost of goods increases this dramatically. Of course, these short-sighted actions on the part of Trump are increasing global trade tensions and impacting US relationships with other nations, including – and especially damaging – with its allies.
The Trump Tariffs will most certainly impact Virginia's economy, consumers, businesses, and various industries across the state. According to estimates, the increased prices of consumer goods may cost Virginians over $2.1 billion annually.
Virginia’s largest private industry is agriculture, and our farming communities will be significantly impacted by the Trump Tariffs. Exports of soybean, pork, and poultry are expected to be hit hard, as is the export of wood products. These tariffs, in combination with the losses of USAID and USDA federal funding that support our farmers and the losses of a reliable farm workforce because of severe immigration restrictions, have the potential to significantly harm Virginia farmers.
While Trump proclaims that he is bringing manufacturing back to the US, the Trump Tariffs will almost certainly have the opposite effect. Industries that rely on imported materials such as steel and aluminum will have limited and even more expensive access to supply. These challenges will lead to higher production expenses and consumer price increases. Additionally, the construction industry and impacts on the real estate markets will lead to further shortages in affordable housing for Virginians.
To say that we are facing both short- and long-term projections of economic uncertainty is an understatement. The broad and sweeping nature of these ill-conceived tariffs are projected to slow economic growth, affect job creation, and exacerbate the concerning losses of thousands of federal jobs already affecting Virginians.
The conservative think tank the American Enterprise Institute (AEI) has issued an analysis that finds the Trump Tariff formula used to calculate the tax to be "based on an error." Not exactly known for his economic acumen, Trump is leading this country down a path that will do great economic damage to the country and to international stability.
