Many in the media and pundits have been talking about a trade war, but now it looks like the real thing is here.
The U.S. is now involved in a disagreement with six out of its top export markets which, according to Kiplinger, account for 53% of all American made exports.
The thing to keep in mind is the U.S. economy is so big that it will take a long time for all of this to have a big national economic impact, and the administration’s plans are reported based on a long game.
Kiplinger and others think Tennessee is in pretty good shape to weather any fallout. But it’s also one of the states that’s vulnerable.
It’s worth keeping a weather eye on how the state’s auto factories and their supply clusters fare when push comes to shove. According to Tennessee Economic & Community Development, nearly 1,000 auto suppliers operate in the state, and there were more than 830,000 vehicles built here in 2016. More than 135,000 people work for those businesses and exports in 2016 were nearly $6 billion.
Closer to home, it should be noted at cellulose acetate is one of the more than 150 chemicals and derivates targeted by China’s retaliation to U.S. tariffs. Eastman Chemical is one of the top players in the cellulose acetate market.
The American Chemistry Council estimates that $5.4 billion in US exports of chemicals and plastics would be exposed to China’s proposed tariffs. If demand does not decline and tariffs are at 25%, then the Chinese government would collect $1.3 billion in duties.
Piney Flats’ Bell Helicopter operations should also be on the watch list. They are a prime player in getting helicopters manufactured in Canada then ferried to Piney Flats for finishing and delivery. Many of those deliveries are to foreign customers.
At the same time, the National Homebuilders Association says increased costs for Canadian lumber has added up to $5,000 to the cost of a new home with more increases to come.
Tennessee farm products and bourbon will also feel the trade pinch.