See which industries will feel the most pain from a China-U.S. trade war
If President Trump follows through on his trade threats against China, it will open a broad new front in his administration’s war with California, a new study underscores.
Most of the concern over the president’s escalating trade conflict with China has centered on the fallout for farmers, particularly in the Midwest, a part of the country that disproportionately voted for Trump in 2016. But an analysis by experts at the Brookings Institution, a non-partisan D.C. think tank, finds that California – and the West Coast, more broadly – have far and away the most jobs on the line in the tariff tit-for-tat between Washington and Beijing.
The agriculture industry is only one of a number of critical California industries that are in China’s cross hairs. Wine, nuts and fruit, are among the 128 products being targeted by China’s Ministry of Commerce, according to the list it released on April 2. So are pharmaceuticals, plastics, Boeing aircraft and Tesla cars.
Beijing’s tariff threat came after the White House announced in March that it plans to tax Chinese steel and aluminum coming into the United States. In response to China’s tariff threat, the Trump administration said on April 3 that it is considering slapping tariffs on an additional list of 1,300 Chinese products.
Brookings researchers singled out 40 American industries that would be affected by Beijing’s retaliatory tariffs, which together employ 2.1 million people across the country. Of those, 441,000 – over 20 percent – are based in California and Washington state.
Los Angeles has the highest number of jobs at risk of any county across the country, with about 40,000 people working in industries that could be affected by Chinese tariffs. King and Snohomish counties in Washington state are close behind, each with about 39,000 jobs that could be affected.
Ventura, Fresno, San Diego, Kern, Alameda, Napa, Sonoma and Monterey counties in California and Yakima County in Washington also rank in the top 25.
“The coastal United States, especially the west, is deeply involved, arguably the most deeply involved” in the U.S.-China trade relationship, said Brookings Senior Fellow Mark Muro, the lead author of the study.
Some parts of California have high concentrations of jobs in just one of the affected industries. For example, Napa, Sonoma, Stanislaus and San Luis Obispo counties top the country in their number of wine industry jobs, while fruit and nut growers would bear most of the impact of tariffs in Fresno, Ventura and Monterey counties. The jobs at stake in Alameda Country are largely linked to Tesla’s Fremont factory.
The Brookings data show that San Joaquin Valley counties have fairly high exposure to fallout from a trade war. In Fresno County, about 5 percent of the workforce –18,400 people – work in industries that could be targeted by Chinese tariffs.
In Merced, 7.5 percent of the work force could be affected, and in Stanislaus County 6.2 percent of workers could be impacted.
Sacramento County has less exposure. About 1,800 people work in industries that could be affected by tariffs, according to Brookings. That’s about .3 percent of the county’s work force.
In Washington’s King and Snohomish Counties, home to Seattle and its northern suburbs, aircraft manufacturers employ more than 70,000 people. Most of them work for Boeing.
Los Angeles and San Diego Counties also employ thousands of people in aircraft manufacturing, as well as pharmaceuticals. Los Angeles has a large plastics manufacturing sector. But because of their huge and diversified economies, those jobs, while large in number, represent a relatively small share of overall employment. That may be why the potential impact of tariffs have not drawn the outcry, or at least the headlines, of hog farmers in Iowa or soybean farmers in Illinois.
Politics are another part of the story. Neither California nor Washington voted for Trump in the electoral college. Both states butted heads with the White House on a number of contested policies, such as immigration and environmental regulations.
“We’ve tended to default to this thought that Midwest and rural counties are the focal point” of tariffs, Muro said. The president, for example, has promised to “make it up to farmers” in the event they are hurt by Chinese tariffs. The White House is also slated to hold a meeting this week with members of Congress from agricultural states to discuss trade concerns.
The impact of tariffs in those regions is real, Muro said. In some heartland counties, a third or more of local jobs could be affected by tariffs on soybean, corn, wheat and other farm products.
Still, those industries employ few people compared to the big manufacturing companies that could be hurt. About 14,000 people work in soybeans and their related products. More than 800,000 people work in the aerospace, pharmaceutical and plastics industries,
“What’s forgotten,” in the political discussion, Muro said, “is that, in fact, our big coastal hubs, our urban hubs, have long been deeply involved in highly-valued trade, often through manufacturing, high tech, pharmaceuticals.” Arguably, those are the industries that “are higher value and leaning into the future,” he said.
Muro also pointed out that products like aircraft, automobiles and plastics are typically part of large, complex supply chains, which could multiply any impact from tariffs across a far broader spectrum of jobs. That is not reflected in the Brookings figures.
California, in other words, “has as much to lose from an ill-calculated [trade] dispute,” Muro said, “just as California is inordinately benefiting, in some ways, from global engagement.”