Trade war would be devastating for Colorado, U.S. Chamber chief warns
Author: Vince Bzdek - August 20, 2018 - Updated: September 10, 2018
The head of the U.S. Chamber of Commerce is beating the drum for free trade and bearing an urgent warning for Coloradans.
In an informal interview with Colorado Politics while on vacation in Colorado Springs, Tom Donohue brandished a chamber report that says $277 million in Colorado exports and 733,000 jobs are threatened by the emerging trade war with China, Canada, European Union and Mexico.
“A trade war,” Donohue worries, “could take the starch out of the economy.”
The stand is a departure for the chamber, which is traditionally a supporter of Republican presidents, and is very much aligned with the Trump administration on deregulation, tax cuts and energy issues.
But more is lost in a trade war than just trade, Donohue warned. Free trade also “builds relationships and alliances,” he said, adding that we need close trading
nations “as customers, as partners, building coalitions for our protection and well-being.
“Trade is significant to economic growth, investment, but it’s also significant to geopolitics, and it’s a fight against transnational crime.”
Because President Donald Trump imposed tariffs on aluminum and steel coming from Europe, Canada and Mexico, those countries have imposed retaliatory tariffs on dozens of American products. New U.S. tariffs on Chinese products have resulted in $50 billion worth of tariffs on American-made products.
Though the impact of retaliatory tariffs on Colorado is nowhere near that of states with large ports or large manufacturing industries, there is still “very significant damage,” according to a chamber report released in July.
Colorado exports roughly $1 billion in Colorado products to Mexico each year, and $1.36 billion to Canada, chamber figures show.
The biggest hit from tariffs to Colorado is trade to Mexico, with an expected loss of $188 million a year, according to the chamber’s report. Most vulnerable to retaliatory tariffs are pork and cheese products.
More than $50 million in Colorado exports to Canada are also targeted for retaliation, including exports of bread, pastries, cakes, aluminum cans and casks.
Exports to China in the crosshairs total $30 million, including aluminum, passenger vehicles and animal parts.
Exports to the EU are the least impacted, totaling $8.2 million, with the biggest impact on iron, steel, motorcycles and whisky.
“Tariffs imposed by the United States are nothing more than a tax increase on American consumers and businesses,” the chamber said in its report. “This is the wrong approach, and it threatens to derail our nation’s recent economic resurgence.”
Donohue has led efforts to expand trade and domestic energy production significantly during his tenure with the chamber. He’s also built the chamber into a lobbying and political powerhouse with expanded influence across the globe.
Donohue’s biggest worry for Colorado and the country is that NAFTA could come apart. NAFTA, which Donohue helped work on as head of the American Trucking Association, is the trilateral pact that lowered trade barriers among the United States, Canada and Mexico, One-third of Colorado’s exports go to NAFTA countries.
“I believe we would hurt ourselves seriously if we destroyed NAFTA,” Donohue said. “Improving NAFTA is different.” He believes the pact needs a “hot wash,” but the U.S. needs to be careful about undermining the underlying free trade structure the United States has built so painstakingly for the last 60 years.
One of that agreement’s ancillary benefits, he said, was accelerated energy development in North America that helped get the U.S. on the road to energy independence. As a result, he said, the U.S. imports far less of its oil from the Mideast, so ‘”NAFTA has great value for our security.”
Donohue does believe it was time to get tough with China, because most of the joint ventures American businesses do with China require them to cough up their technology, and China is notorious for stealing intellectual property.
“It’s best not to do it in the public way we’re doing it, but I’m all for laying down the law,” Donohue said.
He also believes the U.S. needs to get back into the Trans-Pacific Partnership that President Trump pulled the country out of, because China is filling the U.S. void in that trade agreement among a host of Asian nations, Australia, Canada and Mexico.
“We gotta find a better way than tariffs because we’re the ones paying them,” he said.
Donohue was in Colorado Springs for some vacation time at The Broadmoor hotel with family members before heading to Beaver Creek for a wedding.