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NC could pay high price for metals tariffs

President Donald Trump's proposed tariffs on steel and aluminum could take a toll on North Carolina in higher consumer costs and the loss of export markets.

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By
Laura Leslie
, WRAL Capitol Bureau chief
RALEIGH, N.C. — President Donald Trump's proposed tariffs on imports of steel and aluminum could take a toll on North Carolina’s economy, both in higher costs for consumer goods and in potential losses in state exports to affected countries.
Trump announced Thursday he would call for a 25 percent tariff on imported steel and 10 percent on imported aluminum. That move was championed by the U.S. steel industry, which accuses China and other countries of dumping cheap steel into U.S. markets for years in violation of world trade regulations.
As of 2017, according to the U.S. Department of Commerce, the nations exporting the most steel to the U.S. are Canada, Brazil, Mexico, South Korea and Russia, with China ranked 11th. The top exporters of aluminum to the U.S. are Canada, Russia, United Arab Emirates and China.
The United States imports about half of the aluminum it uses for everything from cars to jets to soda cans. About one-quarter of the steel used in the U.S. comes from foreign sources. The tariffs will raise the prices of imports of both metals, allowing domestic producers to raise their prices as well.

Supporters say the move could help revive the moribund U.S. aluminum industry. But it’s also likely to result in higher consumer costs for a long list of products, from housing to appliances to canned food. It’s also likely to increase production costs for aerospace products, one of North Carolina’s top exports.

Still, the higher cost of metals is only one potential impact on North Carolina’s economy. A second, potentially more serious, impact is loss of foreign trade.

Economic experts say countries hit by the proposed tariffs, including China, the European Union and Canada, are likely to respond with retaliatory tariffs on U.S. exports.
In 2014, the last year a comprehensive state report was published, North Carolina exported $31.2 billion in goods, led by chemicals and pharmaceuticals, machinery, transportation and aerospace equipment, technology components like semiconductors and agricultural products.

Canada is the top market for North Carolina’s international exports overall, Mexico is second and China ranks third. The three countries combined bought 40 percent of North Carolina’s exports in 2014. All three would be hit by the proposed metals tariffs.

While retaliatory actions could target any of North Carolina’s major exports, agricultural products are frequently singled out in trade disputes. According to the U.S. Department of Agriculture, North Carolina’s top three agricultural exports by value are pork, poultry and tobacco.

North Carolina pork exports account for $600 million in trade every year, according to the North Carolina Pork Council, and China is the second largest importer. Executive Director Andy Curliss said the group is carefully monitoring developments in Washington.

"North Carolina pork producers continue to express a desire for caution by our government on trade and that governmental actions cause no harm to agriculture or pork production," Curliss said. "We remain very, very concerned about the retaliatory and unintended impacts on our ability to trade our products with established partners. After all, government doesn’t trade. Businesses do."

Curliss said the key markets for North Carolina pork are Mexico, Japan, China/Hong Kong and South Korea, with each market preferring specific products.

"Some hams go to Mexico, for example, and some loins go to Japan. In China/Hong Kong, buyers there pay a premium for internal organs and other cuts that aren’t in as much demand here," he explained. "All of this benefits communities in North Carolina, providing tremendous support for jobs, taxes and other economic activity."

North Carolina’s poultry and tobacco industries could also suffer from retaliatory tariffs. The state was the No. 3 producer of chickens in 2016 and the top producer of tobacco. Mexico is by far the top importer of U.S. poultry, with Canada second. China is the fastest-growing market for North Carolina tobacco exports.

The North Carolina Department of Commerce had no one available for comment Friday.

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