Trade wars appear to be breaking out everywhere, and people throughout the United States are likely to feel the impact. However, some states are vulnerable to being hit especially hard.
Although tariffs are set at a national level, they can impact some places more than others.
For example, some states have economies that are tied to exports of items such as cars, oil and gas, chemicals or electronics. Other states are more dependent on imports — such as car parts — that are key for local industries or supply chains.
States with economies that are heavily reliant on both exports and imports are especially vulnerable to the negative effects of tariffs.
Recently, the National Association of Realtors looked at data regarding each state’s exports and imports relative to its gross domestic product (GDP). According to a blog post by NAR senior economist Nadia Evangelou:
“… understanding which states are most reliant on trade can help explain everything from warehouse demand and factory job growth to how sensitive an area might be to supply disruptions or price changes.”
Here’s a look at the two states that NAR identified as most vulnerable to trade wars, due to their reliance on both exports and imports, followed by the states that are most vulnerable based on their export activity alone or their import activity alone.
Kentucky
- Exports as a share of the state gross domestic product (GDP): 16.3% (which ranks the state No. 3 based on this metric)
- Top exports: Aerospace products and parts; motor vehicles; and pharmaceuticals and medicines
- Top export partners: Canada, the United Kingdom and France
- Imports as a share of the state GDP: 32.3% (which ranks the state No. 1 based on this metric)
- Top imports: Pharmaceuticals and medicines; motor vehicle parts; and semiconductors and other electronic components
- Top import partners: Mexico, Japan and Taiwan
Kentucky exports a lot of cars and aerospace parts, with major companies such as Toyota and GE Aviation operating there.
The value of Kentucky’s imports is equivalent to an even larger share of its GDP than its export value. NAR notes that the state has a “deep integration into the global market,” particularly when it comes to the automotive and pharmaceutical industries.
Texas
- Exports as a share of the state gross domestic product (GDP): 16.8% (which ranks the state No. 2 based on this metric)
- Top exports: Oil and gas; petroleum and coal products; and basic chemicals
- Top export partners: Mexico, Canada and the Netherlands
- Imports as a share of the state GDP: 14.7% (which ranks the state No. 9 based on this metric)
- Top imports: Computer equipment; motor vehicles; and oil and gas
- Top import partners: Mexico, Canada and China
NAR attributes Texas’ high vulnerability to tariffs primarily to its activity in the oil and technology industries and its location on the U.S.-Mexico border.
The Texas-Mexico border is 1,254 miles long, constituting roughly half the length of the U.S.–Mexico border, according to the Texas Department of State Health Services.
The states most reliant on exports
Here are the top 10 states with a reliance on exports that makes them vulnerable to tariffs:
- Louisiana: 26.5% of the state’s GDP comes from exports, with oil and gas being its top export
- Texas: 16.8%, oil and gas
- Kentucky: 16.3%, aerospace products and parts
- Indiana: 11.4%, pharmaceuticals and medicines
- South Carolina: 10.9%, motor vehicles
- Oregon: 10.3%, semiconductors and other electronic components
- Michigan: 8.7%, motor vehicles
- Mississippi: 8.7%, petroleum and coal products
- Alaska: 8.5%, fishing
- New Mexico: 8.5%, computer equipment
The states most reliant on imports
These 10 states have economies that are especially tied to imports:
- Kentucky: The state’s imports are equal to 32.3% of its GDP, with pharmaceuticals and medicines being its top imports
- Michigan: 24.5%, motor vehicles
- Tennessee: 21.9%, pharmaceuticals and medicines
- Indiana: 20.2%, pharmaceuticals and medicines
- Illinois: 19.2%, oil and gas
- New Jersey: 18.1%, motor vehicles
- South Carolina: 16.6%, motor vehicle parts
- Georgia: 16.5%, motor vehicles
- Texas: 14.7%, computer equipment
- Mississippi: 13.6%, oil and gas
Add a Comment