Professor concludes tariffs are bad for Illinois farmers, manufacturers
A commentary in the Belleville News Democrat presents a counter view to those applauding a trade war.
Tariffs are bad for Illinois, concludes the author Stanford L. Levin, emeritus professor of economics at Southern Illinois University Edwardsville.
The trade war is escalating with more and more threats and harmful actions. Tariffs are becoming more widespread, and prices for both imports and domestic products are rising. Even though a small number of jobs may be saved or created, the consequences overall are bad for Illinois, its residents, and its businesses. The same is true nationally.
Tariffs not only raise prices for imported goods, they also permit domestic companies to raise prices as well. At the same time, however, retaliatory tariffs depress exports. While a few companies may benefit from higher prices, many more will be harmed by higher costs. The few job gains in industries that benefit will be more than offset, perhaps massively offset, by job losses in all of the industries that are harmed. And, of course, Illinois residents will ultimately pay the price for this through higher prices and job losses.
Illinois is the sixth largest exporter in the country. Important exports are machinery, computers, chemicals, transportation equipment, and agricultural products. Let’s consider agricultural products. Leading exports are soybeans, corn, pigs, cattle, wheat, oats, sorghum, and sheep. Because of the trade war, export sales are depressed and prices are falling for these products. For example, soybean prices are down 15 percent. There are 25 billion pounds of meat stored, and prices and exports are both falling.
About tariffs’ effects on manufacturing, Levin writes …
Also consider Illinois manufacturing. Major exports include machinery and transportation equipment. Both tariffs on imports by other countries and higher prices for steel and aluminum that raise costs and prices hurt exports as purchasers can and will turn to other countries. Other major export sectors are chemicals and computers, and they will be harmed as well as exports fall due to cost and price increases and tariffs on their sales.