Governors must highlight commitment to free trade
A transformation is occurring in my home state of South Carolina. What was once predominantly a textile state, it is now a center of advanced manufacturing, with a significant percentage of workers employed by companies from across the world, such as BMW, Michelin, and Samsung. Our port of Charleston is a key gateway for American commerce. Our future depends on the United States staying connected to the world for better jobs and lower costs of goods for our citizens. That is why I am so distressed about the trade policies of President Trump, which I believe threaten many decades of good work by our business and civic leaders.
It is also why I firmly believe that as state leaders gather in Washington this weekend for the annual winter meeting of the National Governors Association, they would be wise to add the trade policies of President Trump to an agenda that is typically dominated by infrastructure and education funding, federal tax policy, and health care. Reaffirming the long standing American commitment to free trade, which has created millions of good jobs and lowered costs for consumer products, should stand as an important priority for the governors of this great country.
{mosads}Unfortunately, this commitment has been under assault under President Trump. This attack on free trade began with his decision just days after his inauguration to withdraw from the Trans Pacific Partnership without proposing an alternative or seeking to strengthen the existing framework. This decision has given China an enormous advantage with a group of countries whose combined populations and gross domestic products total nearly 500 million and more than $13 trillion respectively.
Last year, President Trump cited a rarely used section of the Trade Act of 1974 to impose tariffs on steel and aluminum imports from some of our closest allies. These unprecedented tariffs, which the administration tried to justify on national security grounds, have led to a host of retaliatory measures on American exports. One reason cited for these tariffs was to induce other countries to the negotiating table. However, President Trump chose to retain them for Canada and Mexico even after he successfully concluded talks to modernize the North American Free Trade Agreement.
Today, further risks to international trade loom on the horizon. By next month, we may well know whether the United States and China are able to avert a larger trade dispute that could result in the $200 billion in tariffs that are already imposed on Chinese imports increasing from 10 percent to 25 percent. Some in the administration have suggested using the same national security rationale used to tax aluminum and steel imports to tax imported cars, which is another serious threat to our economy. There have also been suggestions that the United States withdraw from the World Trade Organization. This would be a terrible idea since our participation has led to reduced trade barriers and increased prosperity for Americans.
States across the country have felt the negative economic effects of the trade policies already launched by the Trump administration and can ill afford more. Consider a small sample of what is happening across this nation. In Louisiana, a report published last month detailed how soybean farmers have run out of storage space for crops once destined the be exported, where tariffs on American soybeans have priced our products out of the global market. As a result, good crops are rotting in the field.
In California, agricultural products from wine to almonds and pistachios are losing vital global market share in the face of retaliatory tariffs that can run as high as 40 percent. In North Carolina, tariffs imposed in retaliation to American trade policies threaten the $276 million export market in steel and aluminum from his state to Canada and Europe. Pork producers in the state have also been hard hit. In my home state of South Carolina, where we have worked hard to build a strong auto manufacturing industry, the United States Chamber of Commerce estimates that we will be among the hardest hit states by the trade policies carried out by the administration.
Governors are problem solvers who know that trade disruptions affect the states first, usually in the form of lower general fund revenues, increased claims for unemployment compensation, and loss of global market share for their products. Governors also know that 96 percent of customers live outside of the United States. That is why governors from both parties work hard to promote their products overseas. It is clear that the trade policies of President Trump do not reflect these realities. With their presence in Washington, governors must speak in one unified and bipartisan voice to the benefits of free trade to our nation. Their leadership is sorely needed.
Jim Hodges served as the governor of South Carolina from 1999 to 2003. He is the current president of McGuire Woods Consulting in Washington.