- 524 VISITS
- 49 LIKES
“Manufacturing a product impacted by tariffs is like holding a bad stock. It’s easy to know that you’re being hurt, but it hard to know when to sell.”
That analogy sums up the prevailing sentiment shared at a business roundtable on trade policy this week. At the meeting, Congressman Joe Cunningham talked with leaders from many of the region’s largest manufacturers to learn how recent international trade disputes have impacted their investment and hiring decisions.
The punchline: tariffs cause uncertainty, and uncertainty is really bad for business.
Of course, trade policy is not that simple. For decades, American companies have faced significant trade imbalances, particularly with China on issues like intellectual property protection and product dumping by state-backed industries. There is no illusion that the prior international trade status quo was perfect.
But for most of the companies represented in the room this week, the abrupt imposition of tariffs by the U.S., followed by a cascade of retaliatory tariffs by China and Europe, has caused unprecedented uncertainty. The core question is: will they be around for years, or gone next week? Because they were imposed without debate or legislation, no one really knows.
If a business could, with reasonable surety, expect the current tariff structure to remain in place for the foreseeable future, then they can also expect that their supply chain and pricing will be fundamentally altered for the mid-to-long term. The added costs imposed by tariffs would leave many firms in a seriously uncompetitive situation that could jeopardize a lot of jobs. (By the way, that’s already happening!) But, at least, the new cost structure would give some firms a logical business case for altering plans and investing.
Because there is no way to predict the foreseeable future with any surety, businesses are pinched. For many, the extra costs caused by tariffs make their current supply chains and pricing structures suddenly uncompetitive. But this new market reality feels so temporary that dramatic change is imprudent. It’s nearly impossible to know whether to hold out for a return to normal or to cut your losses and reinvest.
This is business paralysis due to public policy uncertainty. Ultimately, that paralysis will hurt employment.
The silver lining is that Congressman Cunningham clearly understands this fundamental business problem, as well as the power dynamic in our nation’s capital. He also appreciates how important international trade is to the employment base in South Carolina. His voice alone won’t solve the problems, but the Charleston region’s business community does have a trade ally in Washington.
Senior Vice President of Government Relations
Follow Ian on Twitter @IanScott843