While some talk about the theoretical consequences of a trade war, New Mexicans don’t need to look very far to see what this means in actuality.
In Santa Teresa, Stanco Metal Products, a company specializing in coating and assembling steel into home-furnishings, says that that base steel prices have jumped more than 40 percent since the administration’s announcement of steel imports. In Mesilla Valley, pecan farmers are on edge about profit margins with an additional 15 percent retaliatory Chinese tariff on tree nuts hanging over their heads. And all across New Mexico, local brewers are trying to make sense of a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum – both raw materials needed to package beer.
These challenges facing New Mexico job creators couldn’t come at a more inopportune time. Even as the national unemployment rate is at an 18-year low, things are less rosy in the Land of Enchantment. According to a report by the Santa Fe New Mexican, the state is still struggling to climb out of the economic recession that began more than a decade ago.
Most of New Mexico’s 33 counties have higher unemployment rates than they did prior to the start of the Great Recession. As a result, the number of New Mexicans living in poverty is higher than it was back in 2007.
College-educated professionals are leaving the state, depriving us of one of our most important resources – human capital – vital to growing our economy and attracting investment.
To turn things around, we need lawmakers in Santa Fe to create an economic environment friendly to growth. But just as important is getting all the help we can get from Washington. And starting trade wars with some of our country’s biggest trading partners certainly won’t help.
According to the U.S. Trade Office, in 2015 an estimated 15,000 jobs in New Mexico depended on goods exports. And in 2016, New Mexican businesses exported $1.6 billion in goods to Mexico alone, representing 43 percent of the state’s total goods exports. China was not far behind with $497 million in exports.
Tariff supporters contend that a more aggressive approach is necessary to curb unfair trading practices and to shrink the trade deficit. But the smart response to bad policy from others is not to inflict pain on ourselves.
Those in Washington who understand that trade is mutually beneficial and makes us all better off need to step up before this trade war escalates.
Fortunately, a number of lawmakers in Washington are acting to prevent this self-inflicted damage. They include Sen. Mike Lee (R-Utah.) and Rep. Warren Davidson (R-Ohio.), who have introduced the Global Trade Accountability Act in the Senate and House respectively. The bills would require congressional authorization before the president can impose tariffs.
None of New Mexico’s U.S. senators or U.S. House Members have cosponsored the legislation, but should do so.
It is unfortunate we’ve reached the point where Congress needs to step in to stop the administration from taking us down a road fraught with economic landmines that jeopardize the livelihoods of so many in our state.
In a trade war, there are no winners. But for the people of New Mexico, the effects would be particularly devastating at a time when we can least afford it.
Washington needs to hear this message loud and clear before it’s too late.
Burly Cain is New Mexico state director at Americans for Prosperity. Paul J. Gessing is the president of the Rio Grande Foundation.