Tariffs and Tweets: The road ahead looks good for South Carolina despite the troubling trade war
Jan 04, 2019 08:28AM
By Chris Haire
“South Carolina’s economy remains strong, but we are in a more volatile market environment than we were last year at this time.” Those words were uttered by Joey Von Nessen, research economist at the Darla Moore School of Business at the University of South Carolina, during the annual S.C. Economic Conference December 4 in Columbia.
That same day, we all witnessed just how volatile the market can be: the Dow plunged nearly 800 points. The primary cause of this sudden slide: Our Commander in Tweet, Donald J. Trump.
In a series of December 4 statements, Trump referred to himself as “a Tariff Man” and said, “When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.” He added, “We are either going to have a REAL DEAL with China, or no deal at all.”
The funny thing about all of this was that just days before, economic experts, investors, the public, and the punditry were feeling positively giddy thanks to a previous set of tweets from Trump, these proclaiming the news that the ongoing trade war with China was in its final days.
Following successful talks at the G20 Summit in Argentina, the U.S. and the People’s Republic had come to a trade agreement, with the communist country backing down. Or at least that was Trump’s Dec. 2 280-word-or-less summation: “China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.” The next day, Trump followed up with news that China intended “to start purchasing [U.S.] agricultural product immediately.”
Of course, both sets of tweets were premature. China had yet to publicly agree to any deal, hence the events of December 4.
A week later, it seems the trade war may be thawing after all, with reports surfacing that China was set to reduce tariffs on U.S.-made cars. What’s an anxious American to do? Cross their fingers?
The only answer, it seems, is to wait.
After all, the economy is still doing quite well. Unemployment is at historic or near historic lows. Wages are rising. And the economy is steadily growing. This is true not just across the nation, but right here in South Carolina.
Of course, that shouldn’t surprise anyone. South Carolina has been riding an economic wave for 10 years. And in large part it’s been driven by manufacturing growth, in particular the automotive industry. It goes without saying there’ve been assists from life sciences, agribiz, tourism, and the steady influx of Northern expats and all the other folks who love our mellow climes.
With the positive economic wave in mind, let’s look at the December report from the Federal Reserve Bank of Richmond: From September to October, payroll employment rose by 0.9 percent in South Carolina, adding 19,000 jobs; unemployment held steady at 3.3 percent; and new residential permits were up 9 percent. Meanwhile, real personal income was up for the state by 1.68 percent in the second quarter, year to year, while median family income was up in all three major metropolitan areas—Charleston, Greenville, and Columbia—by more than 4 percent in the third quarter.
And it gets better: if the U.S. and China reach a trade war detente, Von Nessen predicts we will begin to see positive impacts in late Q3 and Q4, and those impacts may potentially generate 6,000 more jobs.
So all in all, it looks as if 2019 is going to be a good year, perhaps even better than this year’s unnerving roller coaster. That is, if we can keep Trump away from Twitter.
Forget China or Mexico or Canadian lumber: the president’s fingers just might be the biggest economic threat facing us today.