So if Trump tariffs Canada and Mexico, what happens to Wisconsin?

You may have heard that our President-elect has decided to continue with his threats to raise prices on imports and hamper trade with the countries that we share borders with.

Trump trying to start a trade war with our three largest trading partners is truly insane.

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— grimm (@mugrimm.bsky.social) November 26, 2024 at 7:44 AM

With that in mind, UW-Madison Professor Menzie Chinn looked at the data, and wanted to see what effects a trade war with Canada and Mexico might have on Wisconsin consumers and businesses. His findings are posted at Econbrowser.

As part of this analysis, Professor Chinn linked us to databases from the International Trade Association that breaks down trade stats for all 50 states through 2023. It's worth noting that Canada and Mexico get the highest amount of Wisconsin exports, resulting in a sizable trade surplus with Canada, and that these countries are also our 2 largest sources of imports.

When it comes to looking at what Wisconsin gets from these countries, looks like a lot of what comes from Mexico is equipment, and while we also get quite a bit of equipment from Canada, our largest import is paper.

Now if Trump's tariff plan was combined with a larger strategy of encouraging Wisconsin to re-ignite paper production or the type of equipment manufacturing we currently have from Mexico, this might not be a bad idea, especially if the job and wage growth in Wisconsin was to outstrip the increase in prices for consumers.

However, when you're making more money sending products to Canada than you have coming in from there (as we do in Wisconsin), that makes the prospect of Canadian retailiation and protection of their own industries something that would likely hurt Wisconsin jobs. This seems especially true for Machinery, as we send a lot of products in that industry to both Canada and Mexico.

And as Professor Chinn notes in another post on Econbrowser, the last time Trump was president and tried this trade war strategy, it didn't work out for Wisconsinites. Not for agriculture, as Wisconsin led the nation in farm bankruptcies in 2019, or for manufacturers, who saw job and business losses soon after the trade restrictions were put in place.

Maybe all of this is a bluff (and many things are with Trump), and just designed to give the appearance of toughness to other countries, and little will change in terms of trade. But my instinct is that Trump and the sycophants around him are indeed stupid enough to throw these tariffs onto products and end up with retailiation from other countries without the Trump Admin having the next steps planned out to make the needed adjustments for both workers and businesses.

So my guess is that we're going to be back in the bad old days of 2019 sooner than later....except with more automation and more corporate greed likely leading to more pain being felt by everyday Americans.