Retaliatory tariffs China is threatening against U.S. exports would hit hardest in states that helped propel Donald Trump to the presidency, bringing home the risks of a trade war ahead of midterm elections.
Of the 10 states that face potential Chinese tariffs on more than $1 billion of their exports, seven backed Trump in 2016, according to a report by the American Action Forum, a Washington-based group that opposes protectionist trade policies.
The state with the highest value of exports affected is Louisiana, at $6 billion, amounting to 2.6 percent of the state's economic output in 2016. Louisiana is followed by Washington State, which was won by Hillary Clinton, at $5.3 billion, or 1.1 percent of gross state product, and Texas at $4 billion, or 0.2 percent of gross state product.
Ohio and Michigan, swing states which went to Trump after they supported Barack Obama in 2012, are also heavily exposed, according to the report, set to be released on Thursday.
AAF is led by Douglas Holtz-Eakin, a former director of the Congressional Budget Office who was also chief economist to the Council of Economic Advisers under President George W. Bush.
Fred Malek, who worked in the administrations of Richard Nixon and George H.W. Bush, is the chairman of the organization, which says it leads the "center-right" policy debate and pushes for "free-market solutions to create a smaller, smarter government."
The report examines retaliatory tariffs on $3 billion worth of American exports China has imposed in response to levies Trump placed on steel and aluminum imports and tariffs on another $50 billion worth of U.S. exports China has announced but not yet imposed based on additional tariffs Trump has threatened.
Threats and Counter-Threats
Trump has threatened tariffs on as much as $150 billion in Chinese goods in retaliation for what his administration considers violations of intellectual property, with China warning that it would impose tariffs on products of equal value.
The Chinese tariffs are aimed at American products, including soybeans, grains, sorghum, aircraft, and automobiles.
An administration official, who was granted anonymity to discuss government policy, said the Chinese tariffs were intended to distract from Beijing's trade practices, which have hurt American businesses as well as the global economy. The tariffs, the official said, would only add to the damage already done.
The U.S., the official added, has thoroughly investigated China's practices and policies; the Chinese have undertaken no similar study or provided evidence of American malfeasance.
The U.S. and China remain far apart on trade following a meeting between three of Trump's cabinet secretaries and senior Chinese officials in Beijing on May 3-4. Trump and Chinese President Xi Jinping talked about trade in a telephone call Tuesday. Liu He, China's top economic official, has accepted an invitation to continue the talks in Washington.
Trump Team's Trade Mission to China Lays Bare Yawning Divide
A separate study by the Brookings Institution in Washington found that about 81 percent of the counties whose workforce will be affected by Chinese retaliatory tariffs voted for Trump. About 1.1 million jobs in counties that backed Trump would be affected, according to the report. Jobs at risk in counties that supported Clinton amount to about 970,000.
The products targeted by China "seems optimally designed to especially agitate Trump's red-state base," said Mark Muro, a senior fellow at Brookings. "This suggests that Chinese officials have a canny feel for the geography of U.S. trade exposure and are pushing buttons that ensure the U.S. political system mobilizes pushback."
The European Union has also prepared punitive tariffs on the U.S. which hit key Republican constituencies in response to the Trump's trade action on steel and aluminum. The EU targets include motorcycles and bourbon, sending a political message to Washington about the potential domestic costs of making good on the president's tariff threat.
Bourbon is produced chiefly in Senate Majority Leader Mitch McConnell's home state of Kentucky, and motorcycle maker Harley-Davidson Inc. is based in Wisconsin, the home state of Paul Ryan, Republican speaker of the House of Representatives.
(With assistance from Chloe Whiteaker, Sarah Ponczek and Justin Sink.)
