Wichita is being hit hardest by tariffs on China, according to analysis

Aircraft and agriculture...
jobs supported directly by exports
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August 14, 2018 04:58 PM

Updated 6 hours 57 minutes ago

No city in America is being impacted more by the tariffs on China than Wichita, according to a Washington-based research center.

Analysis by the Brookings Institution indicates Wichita has the largest share of export jobs affected by President Trump’s China tariffs: Nearly 9 percent of its export-supported employment — or about 2,900 jobs.

“We’re No. 1 in the nation” in terms of impacts from the tariffs, said Karyn Page, president and CEO of Kansas Global Trade Services. “That’s not a ranking we particularly like.”

Page alerted the Wichita City Council to the city’s vulnerability to the tariffs on Tuesday as the council approved $200,000 for the agency to help pay for the fourth year of a five-year export plan.
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The plan was developed to increase exports from businesses in and near Wichita, and “it’s working,” Page said.

Through the first two years of the plan, local companies — most of them small businesses — have generated $28.6 million in exports.

“That’s just the tip of the iceberg,” Page said.

While some officials haven’t been impressed by that $28 million figure, she said, her response has been “invest more” in export efforts. The agency has a return-on-investment average of 20:1 over the past 15 years.

But the tariffs - a tax on imported or exported goods - are bad news for many local manufacturers.

The Trump administration has implemented tariffs on $34 billion of Chinese goods, as well as on imported steel and aluminum. Trump has threatened to place penalty taxes on up to $500 billion worth of products imported from China.

The European Union, Canada, Mexico, China and other countries have responded to his tariffs by imposing taxes of their own on agriculture products such as soybeans and pork.

Economists have warned that the tariffs could lead to trade wars that will raise prices for consumers worldwide and directly hurt farmers in Missouri, Kansas and other Midwestern states.

The Trump administration called the tariffs on imported steel and aluminum a matter of U.S. national security. The tariffs on Chinese goods come as part of a broader complaint of unfair trade practices by China, including theft of U.S. technology and intellectual property.

“Tariffs are not a good thing for Wichita companies and Kansas products,” Page said Tuesday. “Historically, there’s nothing that tells us tariffs are going to be helpful to us.”

In its 2018 Export Monitor released in June, Brookings Institution — a nonprofit, left-leaning public policy organization — reported “Metropolitan areas that specialize in agriculture, aerospace, and automotive manufacturing are most exposed to the Chinese tariffs.”

Wichita’s two largest industries with jobs supported directly by exports are aircraft and agriculture, according to Brookings.

Most local companies so far are absorbing the costs, Page said, but that can’t continue for long.

“This is not a good thing for our bottom line,” she said. “Eventually, if this is not going to abate, companies are not going to be able to weather this storm forever.”

Kim Martinez, purchasing agent for J.R. Custom Metal, said she has seen the prices for steel soar once the tariffs were announced. Prices have climbed and lead times have stretched out for when materials can arrive.

“This year we have seen some very large increases,” Martinez said, and they’ve had to pass those increases on to their customers. “This makes it difficult to be more competitive.”

Many companies that used to buy from China or elsewhere overseas are now buying U.S. steel, she said, straining the industry’s capacity and driving those prices up as well.

Even though prices have skyrocketed, she said, “business is booming. I’m hearing that from everybody.

“It’s not slowing people down. It’ll be interesting to see how long that continues.”

Wichita is followed in the rankings of most vulnerable cities to the tariffs by Bakersfield, Calif.; Jackson, Miss., and Stockton, Calif.

No city has more total jobs at risk than Seattle, according to Brookings, with more than 16,000 jobs impacted by the tariffs.

Page is urging officials and residents to contact their elected representatives in Washington to let them know how the tariffs are hurting them.

“What they need is personal stories,” she said. “They don’t need for me to tell them rankings and stats.”

The contract approved Tuesday by the City Council covers the 2018 calendar year. Future funding decisions about how much the city will contribute to the export plan will be made by the Greater Wichita Partnership, as part of a restructuring of economic development administration.

Read more here: https://www.kansas.com/news/business/article216660110.html#storylink=cpy