County Jobs Could Be Impacted By Tariff Talks

Roughly 1,077, or 2.3 percent, of the jobs in Chautauqua County could conceivably be impacted by ongoing discussions of tariff changes between the United States and China.

The war of words over tariffs began when President Donald Trump approved possible 25 percent tariffs on $50 billion of Chinese aerospace, computer and other technology. The U.S. Trade Representative’s Office said that was in response to Chinese policies that “coerce American companies into transferring their technology” to Chinese enterprises. China retaliated with a $50 billion list of American goods including pork and steel pipes for a duty increase. President Trump then announced he may ask for higher import taxes on an additional $100 billion of Chinese goods while also hinting at an investigation of Chinese cloud, financial and value-added telecoms services.

The Brookings Institute, a nonprofit public policy organization based in Washington, D.C., recently released an analysis by Mark Muro, senior fellow and policy director of the institute’s Metropolitan Policy Program; Jacob Whitton, a research assistant in the Metropolitan Policy Program; and Robert Maxim, a senior research analyst in the Metropolitan Policy Program.

To observe the local effects of the tariff war, the three authors analyzed the exposure of U.S. industries and places to potential disruption from the two rounds of threatened Chinese tariffs by creating a list of the 40 U.S. industries that produce the 234 products listed by China for potential tariffs in retaliation to both general U.S. steel and aluminum tariffs and specific American tariffs on some 1,300 Chinese goods. Among the items China may increase tariffs on are plastics manufactured products, fruit and nut tree farming, wineries, fruit and vegetable canning, miscellaneous manufacturing, frozen fruit, juice and vegetable manufacturing; unlaminated plastics film and sheet manufacturing, plastics material and resin manufacturing.

“As to what these patterns say about the current trade skirmishing, a few points are relevant,” Mauro, Whitton and Maxim wrote. “For one thing, as several of us have said before about trade reliance more generally, the map of U.S. tariff exposure makes clear that while any “trade war” may be entered as a matter of abstract geopolitics, its particular battles will ultimately involve local and regional economies and jobs–with potentially unexpected ramifications. As we wrote before, ‘trade involves millions of workers in hundreds of real and varied places, and often drives crucial local commerce.’ The implication: any coming trade wars will not be remote from America’s local communities, which will likely not remain silent about their views of any potential dislocation.”

Of course, the local concern is just one piece of a global issue. Many governments, not just the United States, say China’s trade practices violate the spirit of free trade. The Associated Press reported recently that a builder of Japan’s Shinkansen bullet train, Kawasaki Heavy Industries, complained that after it licensed rail technology for use in China, local manufacturers tried to sell it abroad and that China has pressed automakers to shift to using Chinese components suppliers by imposing import taxes on autos assembled in local factories with foreign-made parts. By the time a World Trade Organization panel ruled in 2008 that violated China’s market-opening pledges, automakers had shifted to local suppliers and were teaching them how to make better parts. U.S. authorities also accuse China’s government of using or encouraging cyberspying and theft of technology and business secrets.

More recently, Western governments are on edge about state-financed Chinese purchases of semiconductor, robotics and other companies while foreign buyers are barred from acquiring most assets in China. In Europe, that has prompted complaints the continent might be losing its competitive edge. Earlier, Washington filed a World Trade Organization complaint accusing Beijing of imposing unfair contract terms on foreign suppliers and allowing its companies to keep using their technology once a license expires. In September, President Donald Trump blocked the Chinese purchase of a U.S. maker of semiconductors in September. The same month, the president of the European Union’s governing body announced plans for the 28-nation trade bloc’s first “investment screening” system.

Nothing is final yet, so there is a chance the two counties can reach a compromise. And, as U.S. Rep. Tom Reed, R-Corning, said in his conference call with news reporters from across his district last week, there could be some benefit to area manufacturers if exchange of words over tariffs brings more balance to international trade.

“Many of the engines there manufactured in Cummins find their way into the international marketplace, in particular, the South Korean marketplace,” Reed said. “To have access to more of that market and a level playing field means more products, in my humble opinion, in the long term that could be coming out of that facility that could be leading to more opportunities for Chautauqua County residents in regards to job opportunities that are always associated with increased demand and increased growth.”

Reed mentioned an announcement from China that came out on Tuesday regarding the opening of the market to more automobiles and steps being taken to protect intellectual property. He said South Korea also changed its policy recently regarding trading steel and dairy. Reed said he has also gotten word that NAFTA negotiations are now proceeding. Other products on the agricultural front like grapes and dairy are “in a prime position” to take advantage of the new trade policies.

“You have tariffs potentially being deployed on products that are going to be imported to America,” he said. “Those tariffs translate to potentially pressures on consumers, on people, when they purchase those items at the marketplace. The bottom line is, long-term, this is going to make us stronger as a country in regards to having the ability to make it here and sell it around the world. The more we can get our trade balance closer to even and not run these trade deficits long-term, I think that bodes well for the American worker longer-term.”

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