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MUNCIE, Ind.–The tariffs on aluminum and steel and soybeans could do a lot of harm to Indiana’s economy, said Prof. Michael Hicks, economics professor at Ball State University. He predicted 6,000 people could lose their jobs in the state, by the end of this year.

Hicks said the effects of the tariffs and retaliation by our trading partners will be felt in the coming weeks.

“This is not, by any stretch, a policy that would bring jobs back to Indiana,” said Hicks. “We export a little over 10 percent of all we produce in the state just to the 10 EU countries, Japan, China, Canada and Mexico. Any disruption of that trade is gonna be disproportionately felt in Indiana.”

He said the biggest effect will be in areas that are supportive of the president, including manufacturers in the Midwest and states that rely on agriculture, both of which describe Indiana.


“Soybean and corn producers have no capacity to change what they’re producing this year. They’re just gonna have to eat that big price increase. There’s also gonna be a significant loss of manufacturing jobs,” said Hicks, who published a paper called “Selected Tariff Effects on Indiana”.

“Most of our production here is not in the production of steel or aluminum, but the use of steel and aluminum in automobiles and elsewhere,” said Hicks. That essentially means that Hoosier manufacturers buy steel and aluminum and that it will cost more for our manufacturers to make products.

“They’re either going to have to eat that in terms of profit, less wages, less expansion and investment, or they’re going to charge higher prices to consumers, who will buy less of the product,” said Hicks.

Hicks said the potential economic loss of $600 million in the first round of tariffs could completely erase any benefit from the Jobs and Tax Cuts Act of 2017. Hicks said he is sympathetic to the goals of the Trump administration, and does not have any partisan stance on the matter, but that the tariffs are a bad policy that could potentially cause a recession similar to ones in 1990 or 2001.

“We’re talking about an economy that’s growing, but growing slowly-2.2 percent. Just these two tariffs have already probably knocked a quarter percentage point off that. It’s easy to shift that into a downturn.”

Hicks said if Trump is able to leverage our tariffs and convince our trading partners to reduce their tariffs, then it would be a win for the president and the U.S. economy.

“I think it’s far more likely that this moves into a full fledge trade war over the next several months which will be, frankly, devastating to the Indiana economy.

Hicks said as many as 14,000 people could lose their jobs by the end of 2019.

PHOTO: Thinkstock/Maki Shmaki