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Upgrade to Premium Trump’s tariffs would hit most where his supporters live, analysis finds Janna Herron · Senior Columnist Sat, Oct 26, 2024, 7:44 AM 3 min read
The states that would get hit hardest by Donald Trump's proposed tariffs are Republican strongholds or ones that could determine the election's outcome, a new analysis found.
The GOP presidential candidate has proposed tariffs of 60% on Chinese imports and 10% to 20% on goods imported from all other nations.
The tariffs would take the biggest chunk off the gross domestic products, or GDPs, of Indiana, Kentucky, Tennessee, and Mississippi — all reliably GOP states in presidential elections, according to a new report from the Tax Policy Center. Illinois, Wisconsin, and Michigan followed. The latter two are considered swing states.
"Tariffs, they do matter," said Robert McClelland, a senior fellow at the Urban-Brookings Tax Policy Center and one of the researchers. "It could definitely affect economies, it could affect them in a variety of ways. And it's not just obvious which states are the most affected."
The Yang Ming shipping line container ship is unloaded at the Port of Oakland on July 2, 2018, in Oakland, Calif. (AP Photo/Ben Margot) · ASSOCIATED PRESS
To estimate the effects of the tariffs, the researchers first determined where US imports come from now, how much is paid in tariffs, where the imports go after they cross into the country, and how much those imports make up a state's economy.
The researchers considered GDP, which measures the value of the final goods and services produced in the state. It also smoothed out the disparity in economy sizes of different states.
"California is going to have a huge amount of imports just because it's a huge economy. Same with Texas," McClelland said, noting the analysis included the 60% tariff on China and 10% tariff on all other countries.
While nationally imports accounted for 11% of US GDP in 2023, that differed greatly by state. In South Dakota, imports make up just 2% of its GDP, while the share is 27% for Kentucky. Overall, imports were a bigger percentage of GDP for states in the Midwest and South.
"I didn't anticipate that Mississippi, Tennessee, Kentucky, Indiana, Michigan would be among the states that ended up with the most imports," McClelland said. "I was surprised by that."
Using that information, the researchers could figure out how much Trump's proposed tariffs would affect the imports going into each state.
Read more: What are tariffs, and how do they affect you?
Tariff payments would total more than 3% of state GDP in Illinois, Michigan, and Wisconsin; 4% of GDP in Indiana, Mississippi, and Tennessee; and nearly 5% in Kentucky. Without Trump's policies, tariff payments would have made up less than 1% of the GDPs of each US state.
"That's a huge increase in tariffs," McClelland said. "I think that's an important thing to recognize."
Democratic presidential candidate Kamala Harris has not laid out a specific tariff policy, other than her campaign promise to strengthen "international economic rules and norms that protect fair trade." The Biden administration has kept most of the tariffs enacted by Trump in his first term in place and increased some on Chinese semiconductors and electric vehicles.
What the researchers couldn't tease out is how these tariffs would manifest themselves in each state's economy. In other words, they couldn't tell if imports to one state were largely goods that consumers would buy directly or if the imports were materials that businesses in the state used in production.
Either way, McClelland said, the residents of these states would feel the impact. Some may see higher prices in the supermarket or other stores. Others may see it at businesses.
For instance, a manufacturing plant in the state that uses imported intermediate goods could raise prices. But if it doesn't do that, maybe its profits suffer and the wages it pays employees don't increase as much.
"Those are among the major ways one might expect to see tariffs work their way through the economy. Even if the consumer is not directly affected, an employee might be," McClelland said.
"The money's got to go somewhere."
Janna Herron is a Senior Columnist at Yahoo Finance. Follow her on X @JannaHerron.
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