Tariffs — even tariff talk — is no good for business, according to several people intimate with industrial development in the area and state.
Hundreds of companies had signed up to testify last week before the Office of the U.S. Trade Representative in hopes of preventing more tariffs. According to reports in the Washington Post, President Donald Trump proposed expanding tariffs to another $300 billion in Chinese trade goods.
Tariffs — both implemented and threatened — already have affected the Upstate economy, John Lummus, president and CEO of Upstate SC Alliance, told an audience of business leaders at a GSA Business Report Power Event.
Tariffs aren’t keeping new business from coming to the state, but they’re causing some hesitancy, Lummus said. The Upstate SC Alliance represents the region to companies considering an investment in the area.
“I think tariffs have affected us over the last year,” Lummus said. “It’s not so much specific tariffs; it’s just the uncertainty that they cause. If they (an international company) are going to put a facility here in South Carolina, they don’t know what might happen down the road.”
Appearing on a two-person panel with Lt. Gov. Pamela Evette, Lummus pointed out that a couple of proposed trade agreements the United States had been working toward with other countries, TPP and TTPP – the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership – had been put aside before tariff rhetoric ramped up.
“And just the rhetoric makes companies nervous as they’re looking at South Carolina,” he said. “We are a manufacturing exporting state. We export 275,000 BMWs a year, we export everything overseas so we are a global economy in South Carolina, so when you start disrupting that cycle — those supply chains — it does affect.”
Lummus said he thought the impact of tariff talk was felt in the rest of the state more than in the Upstate, but the size of BMW Manufacturing and its supply chain has some in the development community nervous that when tariffs cause problems for the automaker, the ripples could go far.
Spartanburg County Councilman David Britt, chairman of the council’s economic development committee and a key figure in bringing BMW to South Carolina, has been vocal in his opposition to tariffs, predicting severe economic damage if tariffs begin chipping away at automobile manufacturing. Britt has stated his opposition to tariffs in a GSA Power Event forum, in interviews with GSA Business Report and on several appearances on public radio’s Marketplace business program.
He told Marketplace several weeks ago that the number of international prospects looking into investing in Spartanburg County is down sharply over the last year.
Richard Blackwell, vice president of development for the Southeast for Agracel Inc., said he also has observed a slow-down in activity from international concerns looking for places to build.
“The pace of both ‘new’ project inquires and decisions has slowed down heading into the midpoint of 2019,” he said in an email. “There is a lot of built up hesitation around decision-making due to all kinds of things from tariffs and elections to accessing talent and automation.”
Numbers compiled by the Upstate SC Alliance identified 28 international projects in 2018 and 65 overall for the year. Those projects led to nearly $1.3 billion in investments and 4,259 new jobs. This year, effective with a 500-job Getronics announcement June 12, there were 17 announced projects, six of which were from international companies, creating 1,422 jobs.
There were 31 international projects for the Upstate in 2017 and 28 in 2016. Since 2007, the smallest number of announced international projects were three years of 18 each beginning in 2008.
If the number of projects has declined this year, Lummus said interest has not. The Upstate is still getting visits and inquiries, he said, but a lot of those companies seemed to have slowed their decision making as they wait for tariff resolution.
“Our visits and prospects are up,” he said. “But this (how tariffs may affect them) is always the number one thing that they ask us when we’re talking with companies from Europe, with the U.K. in particular, and obviously with China when we’re working with them.”
Lt. Gov. Evette pointed out that some international companies are moving forward with plans, even if delayed, to invest in the United States, so South Carolina economic developers, including the state government, need to do what they can to make that location the Palmetto State.
“We have a governor who has a very open relationship with the White House and so he is constantly talking with them to make sure he protects South Carolina business and letting them know where businesses stand,” she said.
South Carolina’s four biggest trading partners, Lummus said, are Canada, Germany, Mexico and China, and those countries have been the ones most targeted by tariffs and tariff rhetoric.
“So that’s why we have been concerned because those are not only the companies that we are doing business with, those are the companies that want to come here and do business,” he said. “At Upstate Alliance, we talk about globalization, global economy and free trade and I think that’s what’s best for the Upstate and South Carolina.”