If California Wants to Resist, Let’s Start with Trade Policy

Less than 32 percent of California voters who went to the polls on Election Day in 2016 pulled the lever for Donald Trump. These “deplorables” are probably delighted that Hillary Clinton isn’t president and pleased in general with how Trump has governed. Trump’s trade policies, though, should be another matter.

During the campaign, Trump railed against America’s trade deficit. It was clear he’d rather the country export more goods and import fewer. He has since issued tariffs to alter the balance.

They haven’t had their intended effect, though, according to Pacific Research Institute senior fellow Wayne Winegarden.

“Instead of promoting American prosperity the Trump tariffs are imposing unnecessary costs on U.S. consumers and threatening previously profitable U.S. companies with bankruptcy,” says Winegarden.

Daniel Vincent is one Californian who’s seen the effects first-hand. According to Bloomberg News, “more than half” of his “projected 2018 profit was wiped out with a stroke of President Donald Trump’s pen.”

Vincent is president and CEO of Pacific Coast Producers, a Central Valley food packaging co-op owned by more than 160 family farms. The business depends on imported metal for its canned products. So, when steel and aluminum prices increased in March “after Trump launched the stream of tariffs and sanctions he’s been slapping on overseas trading partners,” the prices Pacific Coast Producers has had to pay for its materials increased too, “by about 9 percent,” Bloomberg reported in April. Vincent told Bloomberg that he is looking for an opportunity to pass on the co-op’s higher costs.

“As with all tariffs, ultimately the consumer pays the bill,” he said.

China responded to Trump’s tariffs the way that most countries do when tariffs are placed on their exports: It retaliated with “tariffs on hundreds of American goods,” said the Brookings Institution, which “analyzed the exposure of U.S. industries and places to potential disruption from the two rounds of threatened Chinese tariffs.” The analysis determined that “California is heavily affected, with Napa Valley wines; Central Valley vegetables, fruit, and berry growers; and Los Angeles plastics all potentially impacted.”

The Orange County Register reported earlier this month that “some 41,000 people in Los Angeles County work in the vulnerable industries,” listed in the Brookings report, “along with 10,700 in Orange County, 8,400 in Riverside County and 6,400 in San Bernardino County.”

The Register said more than 285,000 people work in California in the industries that will feel China’s retaliation.

That’s a small portion of the state’s nearly 40 million residents. But many of these workers are in regions that can least afford to take an economic hit. The California Budget and Policy Center says that while the state’s “overall economy is less dependent on” exports to China than those of other states, “the California counties most likely to be harmed by the potential emerging trade war with China include many that are already struggling economically.”

Agricultural products have been “specifically targeted by the retaliatory tariffs proposed by China,” says the California Budget and Policy Center, “and California farmers exported $2 billion in agricultural products in 2016 to China (including Hong Kong), which ranked third as a destination for the state’s agricultural exports.” The effects of China’s retaliatory tariffs “will be felt most strongly at the local level, among the companies that produce those goods and the workers they employ.”

An example provided by the California Budget and Policy Center of a community that will be disproportionately hurt is Colusa County, a farming region in the Central Valley northwest of Sacramento. It “has the second-largest share of local jobs in industries affected by tariffs among California counties, at 14.1 percent, and had an unemployment rate of 14.3 percent in 2017,” nearly three times the state’s 4.8 percent jobless rate.

After Trump’s election, it didn’t take California long to ally itself with the “resist” movement.

The “resistance” has faded a bit since those initial spasms. But maybe there’s some defiance left in California’s political leaders. If they’re still determined to resist Trump, they should put their focus on his trade policy.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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