Summary:
- International trade is a major pillar of North Carolina’s econonmy
- New Trump tariffs and trade wars of choice will hurt consumers, businesses, and farmers in particular
- The last round of Trump trade wars cost North Carolina farmers billions
With another trade war of choice looming over the American economy, North Carolina’s economy appears likely to suffer the consequences. The range of enacted and proposed tariffs on major trading partners like China, Canada and Mexico would impact businesses, farmers, and every consumer across our state, potentially disrupting an economic engine that supports hundreds of thousands of jobs and billions in economic activity. The full consequences of the Trump team’s new disruptions of international trade are hard to estimate in full, but could be severe.
International trade in North Carolina
International commerce is a major pillar of North Carolina’s economy. In 2023, our state exported $42 billion in goods and $30 billion in services, according to the U.S. Chamber of Commerce — roughly 11% of North Carolina’s entire $638 billion GDP. Yet this direct trade activity represents only the tip of the iceberg. The ripple effects of international trade extend far beyond the raw export numbers.
Each dollar of export activity also generates additional economic benefits that reverberate through supply chains, transportation networks, and support services. Manufacturing facilities that produce goods for international markets create jobs not just on their factory floors, but also in logistics, marketing, and various supplier industries. Ports and transportation hubs that handle international cargo support entire ecosystems of related businesses.
This multiplier effect expands the true economic impact through North Carolina communities. When export-oriented businesses thrive, they support local restaurants, retail establishments, and service providers, many of whom have little idea that their business is supported by consumers in Shenzhen, Manitoba or Jalisco. Their employees purchase homes, cars, and other goods, creating additional economic activity that benefits middle-class jobs across the entire state.
NC’s key trading partners in the crosshairs
The enacted 10% Trump tariff on Chinese goods, which precipitated reciprocal trade impairments from China, threatens a particularly critical relationship. As North Carolina’s second-largest export market at $5.8 billion annually, China’s retaliatory tariffs will directly harm North Carolina businesses. Even more concerning are threatened 25% tariffs against Canada and Mexico — our state’s largest and third-largest trading partners, respectively.
Together, these three countries alone represent 45% of all of North Carolina’s international trade. Disrupting these relationships would send shockwaves through our economy that few communities would miss. The proposed tariffs would not only make North Carolina goods more expensive and less competitive in these crucial markets, but also increase costs for North Carolina consumers and manufacturers who rely on imported goods and raw materials. They would also significantly raise prices for consumers.
The damage would extend far beyond just major exporters. Small and medium-sized businesses throughout the state rely on stable international trade relationships, and tend to be much more vulnerable to short-term fluctuations. Many serve as suppliers or service providers to larger exporters, while others depend directly on access to international markets for their growth. These businesses, often family-owned and deeply rooted in their communities, would face severe challenges under new trade barriers.
Farmers particularly vulnerable
North Carolina’s farming communities stand to lose the most from escalating trade tensions. North Carolina agriculture depends heavily on exports, with about 26% of production exported internationally in 2022 – particularly in pork, chicken, tobacco, and soybeans. In fact, we’ve seen this damage before: when the previous Trump administration withdrew from the Trans-Pacific Partnership, North Carolina farmers lost an estimated $1.8 billion in business, according to Farm Bureau analysis.
Agricultural markets are especially vulnerable to trade disruptions because of their seasonal nature and the perishability of many products. When foreign markets close due to tariffs, farmers often cannot quickly find alternative buyers for their products. This can lead to severe financial hardship, particularly for smaller family farms operating on thin margins.
The timing of these proposed trade barriers could not be worse for North Carolina’s agricultural sector. Many farmers are still recovering from recent weather-related challenges and market disruptions. Adding trade barriers would compound these difficulties, potentially forcing some producers out of business entirely. The agricultural sector’s struggles would particularly negatively impact rural counties. Farm equipment dealers, seed and fertilizer suppliers, processing facilities, and transportation companies all depend on a healthy agricultural economy. When farms suffer, entire rural communities feel the impact.
To what end?
Reviving Trump’s interminable trade wars would deliver a painful blow to North Carolina’s economy. Tariffs drive up prices for consumers already struggling the cost of living, and the inevitable retaliatory measures would hurt export-dependent industries – particularly agriculture. The impact would extend far beyond direct exporters, affecting supply chains, transportation networks, and support services throughout the state.
North Carolina’s $1.8 billion (and counting) in agricultural losses from Trump’s withdrawal from the TPP already demonstrated the real-world consequences of irresponsible trade policy. Repeating these mistakes would hurt North Carolina businesses, workers, and families, with little to show for it.
Instead of raising barriers to trade, a better strategy to strengthen North Carolina’s economy and help its consumers would be expand trade opportunities instead. Every business enjoys access to more customers, and most people enjoy the additional jobs and opportunities that expanded commerce creates. North Carolina’s prosperity increasingly depends on maintaining and growing our international trade relationships, not incinerating them over petty partisan politics. Trade wars have no winners, only losers – and North Carolina’s communities would be among the biggest losers of all.
