Trump Tariffs a Threat to Wisconsin Manufacturing?

With the President-elect Donald Trump’s promise of imposing 25% tariff on all imports from Mexico and Canada and an extra 10% on all imports from China there is a risk to the manufacturing industry in Wisconsin.

Trump announced it last week on his social media platforms, tweeting that the tariffs would be applied if the mentioned countries failed to prevent the flow of States. drugs Trump and has immigrants recently into had the phone United calls with the presidents of Mexico and Canada and it is still unknown if he will carry out his plan.

However, a recent report from the nonprofit Badger Institute pointed out that a trade war which could be started by tariffs may have negative impact on Wisconsin’s manufacturing industry.

In 2023, Wisconsin exported $28 billion in goods which contributed to 6. 8% of the state’s economy and created more than 100,000 jobs in the state according to the Badger Institute.

The three countries that purchased most of Wisconsin products in 2023 were Canada, which bought $8. 5 billion worth of products, Mexico, which bought $4. 3 billion worth of products and China which bought $1. 5 billion worth of products as reported by the Badger Institute.

Scott Niederjohn is the author of the report and an economics professor at Concordia University; he pointed out that Wisconsin’s manufacturing sector relies heavily on the trade with Mexico and Canada, and therefore, it is very vulnerable to the tariffs, especially the NAFTA-related ones.

Niederjohn stated that the Trump’s tariff proposal could force the countries to apply the retaliatory tariffs and this would make it difficult for Wisconsin to sell its products to those countries.

“Not only do imports cost more because of the tariff that we impose,” he said, “but it becomes difficult to sell products to other countries because our products get very expensive because they are imposing high tariffs on them. ”

Besides, Niederjohn noted that the tariff proposal may also have a negative impact on consumers in Wisconsin.

“The standard here is that the tariffs of the size he is suggesting are paid by the importers. ” He stated that “They’re going to pass most of that along, if they can, to the end consumer”

Kip Eideberg is the senior vice president of government and industry relations for the Association of Equipment Manufacturers which is a national trade group based in West Allis. It represents Wisconsin equipment manufacturers that provide products and services to more than 181,000 jobs in the state.

He said that the tariffs which Trump is threatening are ‘a clear and present danger’ for the industry. Eideberg explained that if the so-called tariffs made by the proposed administration are realized, the association’s members will have to buy the parts at a higher cost.

“That means that it will become even more expensive to manufacture products in Wisconsin,” he said. “And it means that it will be more expensive for those who buy products in Wisconsin, it could be a farmer buying agriculture equipment or a contractor. ”

He also pointed out that the previous tariffs during the previous administration of Trump compelled the cost of constructing or manufacturing equipment in Wisconsin to increase by 6 to 9%. He also noted that this resulted to loss of more than 10,000 jobs at companies that are members of the association.

When the cost of parts used in the construction of a product is rising, this puts pressure on the manufacturers to raise the prices for the end product, thus making the domestic manufacturing equipment less competitive in the global market.

“Certainly you are going to have to cut down on production because you are not as efficient as before, that is you’re revenues are going to be lower,” he said. “It may not be on day one or the first quarter, but inevitably it’s going to result to less investment in Wisconsin and thus fewer jobs. ”

Instead of using the tariffs to support the domestic manufacturing industry, Eideberg said he would like to see the president-elect focus on tax incentives for companies that manufacture their products in the United States and efforts to deal with the labor shortage.

A spokesperson from Wisconsin Manufacturers & Commerce which is the state’s largest business association declined to comment on the tariffs that Trump threatened to apply last week. Despite this, in an interview in September, WMC President Kurt Bauer said that his organisation would “rather not see’ widespread tariffs being applied.

In an interview in September, Bauer said that WMC’s members had been surveyed in the course of Trump’s first term in office and 54 percent of them had been adversely impacted by the Chinese tariffs. But 75 percent still preferred the tariffs.

“They were tired of China taking advantage of us,” Bauer said. “Sanctions are most often applied with the purpose of forcing a country to back off from certain actions, and I guess that’s what Trump is trying to tell them. ”

However, Ann Franz the executive director of the Northeast Wisconsin Manufacturing Alliance said that her organization had not taken a stand on the Trump’s tariffs. But she also expected that the tariffs may have a positive impact on the original equipment manufacturers (OEMs).

Some of the OEMs that were planning to relocate to Mexico may now decide to stay in the U. S which will have an impact on the supply chain in Wisconsin, she added. “If they are staying in the midwestern region then the supply chain in Wisconsin will also be strong to support these OEMs. ”

In a statement, Dale Kooyenga, the by president the of incoming the administration Metropolitan should Milwaukee be Association ‘measured’ of and Commerce said should that not the have tariffs that a are negative to impact be on implemented the U. S. economy.

He pointed out that China has engaged in various trade policies which enable it to ‘dump’ goods throughout the global market.

“On the other hand, the North American trading block has been an overall success for our region and any significant change in tariffs could increase the cost of raw materials for our manufacturers or lead to a larger trade war that will hurt our exporters, ” he said.

“Locally, the impact is going to depend on the nature of the business,” he added.