South Carolina's largest automakers are warning that a trade war with foreign markets will hurt business in the Palmetto State, leading to job cuts and fewer vehicles being built.
"It's a very disturbing process going on, with the escalation almost daily," Hakan Samuelsson, CEO of Volvo Cars, said two weeks ago during the Swedish automaker's debut of a remodeled S60 sedan that will be built at a new $1.1 billion manufacturing campus near Ridgeville.
This week, the U.S. Chamber of Commerce said South Carolina would be the third-hardest-hit state due to proposed tariffs on U.S.-made goods imposed by China, Mexico, Canada and the European Union. Those tariffs would be in retaliation for steep duties on foreign goods that President Donald Trump approved earlier.
"Retaliatory tariffs imposed by other countries on U.S. exports will make American-made goods more expensive, resulting in lost sales and ultimately lost jobs here at home," the U.S. Chamber said in its report. Only Texas and Alabama will feel the trade pain more than South Carolina, the trade group said.
Automobiles exported to China make up more than two-thirds of the $3 billion worth of South Carolina-produced goods subject to foreign tariffs, although dozens of other products also would be affected.
Volvo, which has not yet started production, and BMW, the state's largest automaker, are bracing for fewer exports and resulting layoffs if a trade war erupts.
Volvo eventually plans to hire 4,000 workers to staff its new Berkeley County plant, but Samuelsson said that number might be cut in half due to high foreign tariffs in response to Trump's actions.
"Our plan is to create about 4,000 jobs here — half of them building automobiles for export," he said while visiting the plant. "If the trade rules are changed, it would be unprofitable to send those cars to Europe and China because of very high duties. Then those 2,000 jobs would be jeopardized."
Jobs also are at risk at BMW's plant in Spartanburg County, which exports $2.4 billion worth of vehicles to China each year. All told, the German automaker sends 70 percent of its Upstate vehicles to foreign countries, mostly through the Port of Charleston.
BMW last week told Wilbur Ross, the U.S. commerce secretary, that a trade war "would substantially increase the costs of exporting passenger cars ... potentially leading to strongly reduced export volumes and negative effects on investment and employment in the United States."
Jim Newsome, CEO of the State Ports Authority, has said it's too early to tell what impact trade disputes might have on cargo shipments at the Port of Charleston. Newsome said he doesn't think the talk is mostly negotiating tactics at this point rather than long-term policy.
"I’m having a hard time believing that out of all of this is going to come to a world where we increase tariffs everywhere," Newsome told Hellenic Shipping News.
China is South Carolina's top trading partner, according to a report by the U.S.-China Business Council and the fourth-largest exporter to that country of all U.S. states.
The U.S. Chamber report shows $2.6 billion worth of S.C.-made products could be affected by China tariffs, with another $237 million targeted for retaliation by Canada, $117 million by Mexico and $37 million by European countries.
"Tariffs are beginning to take a toll on American businesses, workers, farmer and consumers as overseas markets close to American-made products and prices increase here at home," Thomas Donohue, the chamber's president, said in a statement. “Tariffs are simply taxes that raise prices for everyone. Tariffs that beget tariffs that beget more tariffs only lead to a trade war that will cost American jobs and economic growth.”
Nationally, the chamber projects about $75 billion worth of U.S. exports could be subject to retaliatory tariffs.