By John A. Tures, Professor of Political Science, LaGrange College
The Spring Tariff Wars that the Trump Administration launched have sparked fears of a severe economic recession, and even empty shelves. That’s a reasonable concern, given that the last time we found ourselves in this situation, the Great Depression followed, and World War II less than a decade after that. Georgians are wondering what will happen to them. This article addresses that very topic.
The best way to figure out who will be affected is to determine which states are most vulnerable to global economic shocks. The good news is that Georgia is a little less vulnerable to the world market for exports. The bad news is that imports are a different story. And for the South in general, it’s one of the more plugged-in regions for exports as well as imports making this a costly tariff war.
According to the National Association of Realtors “Tariffs are set at the national level and apply uniformly. However, even though trade policies are made in Washington, D.C., their effects reach much closer to home and do not impact all states equally. Some states have built their economies around global exports: shipping cars, chemicals, or electronics to buyers worldwide. Others import massive amounts of goods, such as car parts, that feed into local industries and supply chains. For example, Texas exports a significant amount of oil and gas, while Michigan is closely tied to auto manufacturing. Meanwhile, states often have different key trading partners. Texas and Arizona are heavily integrated with Mexico, while the West Coast engages in more trade with Asia. Thus, understanding which states are most reliant on trade can help explain everything from warehouse demand and factory job growth to how sensitive an area might be to supply disruptions or price changes.”
NAR’s data looks at each state’s exports and imports as a share of the state’s gross domestic product (GDP). For exports, Georgia is at 6% of its exports as a share of its GDP, which looks to be par for the course, ahead of some states, but behind others. But the South is looking to be very reliant upon an export-led economy. Louisiana is the highest (26.5%), followed by Texas (16.8%), Kentucky (16.3%), and South Carolina (10.9%), four of the five highest (Illinois is fourth at 11.4%). For the rest of the South, Alabama, Tennessee, and Mississippi are more dependent on exports than Georgia is, while Florida, North Carolina, Arkansas, and Virginia are less reliant on exports.
For the record, the South appears to have the highest reliance on exports. It’s a mixed bag for the West, and Midwest. The Northeast region has the lowest average exports of any of the four regions.
When it comes to imports, Georgia could be a little more vulnerable. The state has a 16.5% share of its GDP linked to imports. It’s less than the leaders like Kentucky (32.3%), followed by Michigan (24.5%), Tennessee (21.9%), Indiana (20.2%), Illinois (19.2%), New Jersey (18.1%) and South Carolina (16.6%). But Georgia is eighth in reliance on imports in the United States, with Texas (14.7%) and Mississippi (13.6%) rounding out the top ten for states linked to imports.
What’s important to note is that we have an economy that’s been built on lowering tariffs rather than raising them since the end of World War II. It’s natural to realize that such an economic shock to the system is going to challenge any state or region in America. Hopefully, our government will learn from history and proceed with caution when it comes to considering our international commercial policies.
John A. Tures is a professor of political science at LaGrange College in LaGrange, Georgia. His views are his own. He can be reached at jtures@lagrange.edu. His “X” account is JohnTures2.