Tariffs, Trade Wars, and Idaho

Guest Editorial by Steven L. Taggart

I got into politics because of Ronald Reagan. He was a vigorous advocate for international trade, stating in 1988:

Our peaceful trading partners are not our enemies; they are our allies. We should beware of the demagogues who are ready to declare a trade war against our friends—weakening our economy, our national security, and the entire free world—all while cynically waving the American flag. The expansion of the international economy is not a foreign invasion; it is an American triumph, one we worked hard to achieve, and something central to our vision of a peaceful and prosperous world of freedom.

President Trump does not share Reagan’s sentiments. The last few weeks have been dominated by Trump’s efforts to impose tariffs on the rest of the world. Earlier this week he announced a 90 day pause to negotiate with major trading partners, still coupled with an immediate 10% tariff (plus 25% for steel, aluminum, vehicles and car parts) on them. And, he singled out China for a whopping 145% additional tariff. Arguably, China is deserving of desperate treatment because of its blocking of U.S. exports and theft of U.S. intellectual property. The case for other countries is less strong.

What is the direct impact on Idaho of these trade disputes?

Let’s start with the Idaho trade data compiled by the Idaho Department of Commerce (the latest is for 2023). Idaho in 2023 exported about $4 billion and imported $6 billion in goods.

Our largest export partner in 2023 was Canada at nearly $1.5 billion, followed by $504 million to Taiwan, Mexico at $284 million and $234 million to Japan. China was our 7^th largest export market at a much smaller $181 million.

Unsurprisingly, Idaho farm and agricultural products lead the way with exports valued at nearly $1.2 billion. According to Sam Eaton of the Idaho Potato Commission, 20% of Idaho’s potatoes are shipped overseas. Britney Hurst Marchant of the Idaho Wheat Commission points out that half of Idaho’s wheat is shipped abroad.

Idaho’s next export categories are more than $1 billion in machinery and electrical equipment (including semiconductor components), $620 million in chemicals, fertilizers and cosmetics, and precious stones, jewelry and metals at over $311 million.

What does Idaho import? By far the largest single segment in 2023 was machinery and electrical equipment (which includes computer chips) at $3.7 billion.

Our largest trading partner by far is Canada which Idaho ran a $150 million trade surplus in 2023. Our exports there are led by agriculture products at $383 million and chemicals, fertilizers and cosmetics next at $283 million. What do we import from Canada? Following agriculture products, the next highest Idaho import is wood products, much of it lumber.

China draws much of the national attention, but it is only Idaho’s 7^th largest export market. We did run a $110 million trade deficit with it in 2023.

Trump’s announced tariff rate for China would be costly for Idaho, more than $420 million a year if trade levels are maintained. Even more impactful is the new 10% tariff on Idaho’s other trading partners which would add another $570 million in costs each year (not factoring in the higher 25% metals and vehicle tariff). That hit of roughly a billion dollars a year is more than double the size of the $450 million in tax relief approved by this year’s Legislature.

Now, this analysis does not take into consideration that tariffs may diminish Idaho’s international trade, which could temper the amount paid by Idahoans. The offset to that is the hit to Idaho’s exporters (90% are small businesses, many of which are farmers, dairies and ranches) if Idaho exports do diminish.

More disturbing, the billion-dollar hit to Idaho’s economy could soar if Trump imposes higher tariffs after the 90 day pause. That is why I think Congress needs to weigh-in and take back from the President the ability to impose tariffs. One of the key leaders of that effort is conservative Republican Senator Rand Paul. Idahoans should encourage our congressional delegation to join that effort or accept the massive hit to their wallets.

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About the Author

Steve Taggart is an attorney in Idaho Falls and has worked in Republican politics since his teens, both in campaigns and for elected officials, including running a congressional office.