A brewing trade war between the United States and China has experts concerned about how such a contentious battle could impact West Virginia and the nation.
The first wave of President Trump’s tariffs against China, $34 billion worth, launched officially July 6 with China announcing its own retaliatory $34 billion worth of tariffs, shortly following with additional tariffs believed to be coming from both sides in the coming weeks.
The 25 percent level of America’s tariffs on China has for now been centered on Chinese manufacturing, with China’s tariffs on American goods centering on the agricultural sector.
Waiting for the dust to settle to measure the impact of the trade war, West Virginia University economist John Deskins is concerned about what could possibly happen to West Virginia and the nation as the trade war intensifies.
With 10 percent of West Virginia’s economy coming from exports, Deskins said that exports are a very sensitive but important part of the economy.
“While it’s very uncertain what will happen, there is certainly the potential for it (trade war) to harm West Virginian exports and that could also, in turn, affect our overall prosperity,” said Deskins, director of the university’s Bureau of Business and Economic Research.
The economics expert is concerned in the immediate future about a proposed Chinese investment in the state, the Appalachian Underground Natural Gas Storage Hub in the state’s Ohio River region.
“Right now we’re talking about the potential for over $80 billion in investments from China Energy and if we do get into a nasty trade war with China, it may have some potential to affect that investment,” Deskins said. “I think it’s too early to tell right now.”
While the threat of a trade war leaves the future uncertain, Deskins said that like anything in economics, there are winners and losers.
“There’s a potential for it to help some people for sure, but it’s just the matter of the winners versus the losers,” Deskins said, adding that most economists believe that barriers to trade, such as tariffs and trade wars, hurt overall economic prosperity.
While waiting for the dust to settle, Deskins is calling for caution.
“Personally, I would hope that our leaders would be very cautious and careful because there is a lot of potential for damage here,” the economics expert said.
Deskins isn’t the only expert concerned about how a trade war could play out.
“The Trump administration chose not to target goods that American consumers typically purchase from China, which again should make consumers happy. However, the products that will be taxed heavily are those used by many industries,” said Christina Fattore, an associate professor of political science at the university. “Higher prices for chemicals and industrial parts and machines could result in Americans losing their jobs as corporations try to cut costs during this crunch. Considering the administration’s ‘America First’ platform of bringing jobs back to the U.S., this could quite possibly backfire horribly. While consumer prices may not be affected at this stage, trade is a game of tit-for-tat. If one country threatens another with tariffs, you can be sure that the other country will ramp up tensions through reciprocal restrictions and so on.”
According to Fattore, the impact of a trade war between the two superpowers will be judged by how long it lasts and which country backs down first.
With future possible tariffs coming down soon from both sides, the biggest question and concern is what products will be on each country’s list.
While West Virginia itself has been spared from the agricultural tariffs imposed by China, future tariffs could have an impact on the coal mining industry.
According to reports from S&P Market Intelligence, prior to the tariffs being imposed, multiple U.S. coal mining interests reported increased interest from China in purchasing American coal.
While China takes up just a fraction of American coal exports, the large majority of the coal that China import is of the metallurgical variety.
The majority of the nation’s metallurgical coal is mined in Appalachia.