No one knows for sure whether President-elect Donald Trump is going to follow through on his tariff threats. Some believe it could just be a negotiating ploy, something to hold over the heads of adversaries and allies to get better deals than what we’ve got.
Others have pointed to the times Trump made good on tariff threats — solar panels and washing machines in 2018, followed by steel and aluminum tariffs, as well as tariffs on Chinese goods.
Either way, economists are fielding a lot of questions about tariffs, and one of the most common is, “What do we stock up on before Jan. 20 — just in case.”
“My husband just asked me that the other day,” University of Wyoming economist Ann Alexander told Cowboy State Daily. She is vice provost for strategic planning and initiatives for Academic Affairs.
It’s not a question that Alexander and other Wyoming economists feel can yet be easily answered.
While on the campaign trail, Trump has threatened a 60% or more tariff on goods from China, as well as a 10% to 20% tariff on all imports to the U.S. At one point, he also threatened a 25% or more tariff on imports from Canada and Mexico.
But a lot can change between now and Jan. 20, when Trump takes office, Alexander pointed out.
“A lot of this might have been posturing,” she said. “But nevertheless, he did say many times when he was on the campaign trail that he intended to use tariffs, so to the extent he carries that out, it’s a tax.”
Who exactly pays that tax depends on market conditions, Alexander said.
Exporters could reduce wholesale prices if they feel they must to compete with other markets.
Domestic firms might decide to eat some or all of a tariff, if they feel the domestic market, still struggling under inflation, can’t bear any increase in prices.
“But I seriously doubt that’s going to happen,” Alexander added. “It’s more likely that some or all of the tariff is passed on to consumers.”
Not Toilet Paper Again
Whenever uncertainty strikes, one of the first casualties in the marketplace always seems to be toilet paper.
We saw it during the COVID-19 pandemic, we see it every time the weather forecast calls for a lot of snow, and the threat of tariffs doesn’t appear to be any different.
Fear of higher tariffs has already motivated Americans to buy more, according to data compiled by CreditCards.com, in anticipation of higher prices ahead, and many of those said they are also stocking up on other essential items.
Of those stocking up, 77% said toilet paper is at the top of their lists, followed by nonperishable foods at 76%, medical supplies at 58%, and over-the-counter medications at 54%.
The latter is what Alexander has stocked up on, just to “hedge her bets” a little, but toilet paper did not make her list at all. In fact, toilet paper would not make the top of the list for most economists.
That’s because 99% of the nation’s $9.4 billion toilet paper industry manufactures that product right here in America.
Toilet paper is generally made from a combination of softwood and hardwood trees.
The latter, which include gum, maple and oak — all native trees — have shorter fibers and make paper softer; while the former, which include southern pines and Douglas firs — also natives — have longer fibers that wrap around each other, making toilet paper stronger.
Toilet paper should be safe if people just don’t panic and create an artificial shortage by buying up all the supply.
Negotiating Tactics And Necessary Evils
Figuring out exactly what goods to worry about is tricky at this stage.
For one, Trump has been cagey about the details when it comes to tariffs. Keeping an opponent off balance isn’t unusual when it comes to tactics at the negotiating table.
“Tariffs, or just the threat of tariffs, can be an effective tactic to get these countries to the negotiation table,” U.S. Sen. John Barrasso, R-Wyoming, told Cowboy State Daily in an email. “Republicans will work with President Trump to make sure we get the best deal for the American people.
“President Trump will fight to protect American workers, secure our border, and put our economy back on track.”
Manufacturers, meanwhile, are getting ready just in case, but they’re not necessarily freaking out about it. Some are even seeing tariffs as a necessary evil.
“We have been actively de-risking our supply chain by moving all sourcing to North America and allied countries,” L&H Industrial President Mike Wandler told Cowboy Stat Daily. “While there are still a few minor areas of exposure, they are minimal compared to the risks faced by our competitors. Ensuring supply chain stability and resilience remains a top priory for us.”
Wandler said as a business owner, he’s not a big fan of tariffs, but he sees them as potentially necessary.
“(They are) a better option than war or allowing other countries to dominate North America,” he said. “The last time tariffs were implemented, we didn’t see a significant change in the heavy industrial sector. In fact, China often discounted to offset the impact.”
This time, Wandler said he expects tariffs to be steeper, reducing the possibility that discounting will make up the difference.
“This should drive re-shoring of heavy industrial manufacturing,” he said. “Or at the very least shift production to allied countries. From my perspective, these measures are a necessary step for national security.
“While they come with challenges, I believe they will ultimately be a positive move for L&H, the U.S., and our allies.”
China Is Likely Highest Risk
Like Alexander, Wyoming Economic Analysis Division Chief Wenlin Liu believes that China is probably at the top of the list of likeliest candidates for any actual tariffs.
“When you talk about tariffs, I think you probably have to talk about China,” he said. “China was granted permanent normal trade relations in 2000. Then, in 2001, China joined the World Trade Organization.”
That resulted in a number of U.S. manufacturers relocating to China, among them Apple, which manufactures the iPhone, and Tesla, which makes electric vehicles and batteries.
As ties between China and America have become frayed, Apple and other American companies have looked to “friend-shore” their plants away from China to countries with friendlier, more stable environments. But many, like Apple and Tesla, still have some presence in China.
A 60% tariff could make some things messy for those companies. Particularly at risk, Liu and Alexander suggested, are electronic gadgets, cars and textiles.
America and China are already somewhat engaged in a tech trade war.
President Joe Biden not only kept some of the tariffs Trump imposed on China, but has expanded on them lately, even as domestic companies race to reshore mining and processing of the rare earth elements used to make computer chips, cellphones and a wide array of other goods.
That will take some time to set up, Alexander pointed out.
“So, if you’re looking at updating your gaming equipment or anything like that, which is made in whole or in part in China, then you should probably do that,” she said. “And if I was going to buy a car, I’d probably buy it sooner than later. If you’re already thinking about it, it’s probably not a bad time to pull the trigger on that.”
What About Mexico, Canada?
One of the reasons Alexander is stocking up on over-the-counter medications is because she expects, if there are tariffs on trading partners Mexico and Canada, certain compounds used in their manufacture could be hard to get.
Oil, minerals, fuel, industrial machinery, electrical machinery, organic chemicals, iron, steel, furniture, fertilizers and wood, as well as arms and ammunition, are among goods Wyoming brings in from Canada.
There’s also a healthy flow of the latter back into Canada.
“Apparently we have a healthy trade in arms and ammunition back and forth,” Alexander said. “So that’s kind of interesting.”
When it comes to Mexico, the biggest imports are fresh fruits and vegetables. Those are a bit difficult to stock up on. Freezing some might work in the short term, but it’s a lot of work, and then the food isn’t as fresh.
Alexander and Liu both felt tariffs on these trading partners and U.S. allies are less likely to actually occur and are more likely to be part of a negotiating tactic.
“Tariffs on Canada and Mexico would violate the treaty that Trump himself helped to renegotiate, the USMCA,” Alexander said. “So that would probably get hung up in the courts.”
It would also likely spark tariffs in return on American goods.
“We’ve seen what they say isn’t always what they do,” Alexander said. “I do think some of this is posturing and saying, ‘You know, we have a problem with these other things, these geopolitical things, and you’re not working hard enough to solve it, so because of that, I’m going to threaten this.”
China, too, could still all be posturing, Alexander said.
“This negotiation in public, and that’s not necessarily what happens in trade policy,” she said. “Actual trade policies usually are not made on Twitter or X or whatever it is. So, at this point, I wouldn’t panic too much.
“But I do think that the China tariffs will probably, at least in some way, shape or form, get expanded, and that we should probably be prepared for things like electronics and chemicals to get more expensive.”
Renée Jean can be reached at renee@cowboystatedaily.com.
