Exclusive: International Trade Forum Says Tariffs Create Risks for South Carolina
Monday, April 22nd, 2019
The United States in general – South Carolina in particular – is heavily invested in foreign trade, and anything that would disrupt commerce creates risk.
That was the consensus of speakers April 18 at a University of South Carolina forum. “International Strategy in an Era of Trade Uncertainty” was hosted by the Folks Center for International Business at the Darla Moore School of Business and co-sponsored by the U.S. Chamber of Commerce and the S.C. Chamber of Commerce.
Lead panelist John Murphy, senior vice president for international policy at the U.S. Chamber, gave a data-driven presentation showing America's deep involvement in international trade. Among the numbers, he said, “41 million American jobs depend on trade.”
The Organization for International Investment estimates that South Carolina has the nation’s highest share of private-sector employment tied to foreign direct investment, 8.2%. Murphy estimates 579,300 Palmetto State jobs depend on international trade, with 131,900 of those workers directly employed by foreign-owned companies.
“It’s a remarkable success story,” he said.
However, deals such as the North American Free Trade Agreement have been blamed for manufacturing job losses here and around the country. Former U.S. Sen. Ernest Hollings, the South Carolina Democrat who died April 6 at age 97, was often critical of NAFTA and other trade deals.
Rather than international trade, Murphy points to another reason for manufacturing job cuts during an era in which U.S. manufacturing output increased.
“What’s been going on in manufacturing is an incredible productivity revolution,” he said.
Fellow panelist Jim Barber, chief operating officer with United Parcel Service Inc., bolstered that argument. He pointed out that thanks to automation, a UPS facility outside Atlanta can operate with half the workers it would have needed previously.
Another panelist, Wendy Cutler, vice president and managing director of the Asia Society Policy Institute, once served as Acting Deputy U.S. Trade Representative.
“I negotiated a lot of these trade deals that are being criticized now,” she said. Decades ago, she said, American negotiators were “calling the shots” during trade talks, but things have changed.
“As a result, I think that makes many Americans uncomfortable,” she said. So, too, do layoffs, and she added, “we haven’t done a great job of helping those left behind by trade.”
Cutler described the Trade Adjustment Assistance program, designed to provide training and employment assistance for displaced workers, as ineffective.
Still, the U.S. is experiencing a period of low unemployment. South Carolina’s March rate was 3.2%.
“Workforce development is key,” said George Jurch III, general counsel for global expert teams and the Americas region with Continental. The tire maker has a Sumter manufacturing facility that is struggling to hire workers, he said.
Jurch said the Sumter plant, which primarily serves the domestic market, has not seen the negative impact of tariffs enacted by President Donald Trump and subsequent retaliation by other nations. If the facility was to expand, however, he said it would need to import specialized German machinery that could be subject to levies.
The Trump tariffs, covering aluminum, steel and other items, received a unanimous thumbs down from the panel, as did current resistance to new trade agreements.
“If we go too slow as a country, trade deals will happen around us,” Barber said.
So how can the U.S. protect its businesses and workers from an uneven international commerce playing field?
Murphy said “there’s broad agreement in Washington” that China is a problematic trading partner due to issues such as intellectual property theft, “and they need to be addressed.”
But how? Murphy suggested the Trump administration drop tariffs against nations such as Germany and Japan, then enlist them in forming a united front against Chinese trade abuses.