Trump’s Mexico tariff plan threatens to crush the plastics sector — and hundreds of local economies

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The United States will begin punching itself in the economic face with increasing vigor and speed until Mexico somehow stops every last northbound undocumented migrant, President Donald Trump announced on Thursday.

The president plans to slap a 5% tariff on everything Mexico exports north, then hike it monthly to a maximum 25% tax by the autumn. The policy will do obvious and enormous harm to workers and consumers either side of the U.S.-Mexico border, a fact not lost on business leaders, economists, and elected officials of every ideological stripe, who immediately decried this scheme.

Early coverage has largely foregrounded the impact on the automotive business, as well as the price of a certain green fruit with a single, large seed that can taste very good on toasted bread. The focus on cars and foodstuffs is natural. Beyond ranking among the biggest components of U.S.-Mexico trade, they’re categories of commerce which reporters and politicians know are intuitively and viscerally understood by everyone to whom they speak. But the wall-to-wall tariffs carry a far wider if less-heralded threat to local communities around the country.

One word: Plastics.

Some 989,000 people work directly for plastics manufacturing companies around the U.S., according to statistics from the industry’s primary trade association. When those employed by supplier firms that are factored in, the figure jumps to 1.8 million workers.

Most of the firms that employ those Americans are much smaller than the massive car-building plants that draw so much attention from reporters and politicians. The industry’s relationship with Mexico is smaller too: The U.S. imported about $5.3 billion in Mexican plastics last year, Plastics Industry Association chief economist Perc Pineda told ThinkProgress, compared to $93 billion in automotive imports and another $120-plus billion in other machinery.

U.S. manufacturers only get a fraction of their raw materials from Mexico. And approximately three-quarters of that $5.3 billion in exports comes in the form finished products — rather than the resin form of polyethylene, styrene, vinyl, and other materials used to make everything from small consumer goods to the key components of larger products like lawnmowers and cars.

But even if those firms are able to adjust their own supply chains to skirt the tariff hit on the production side, Pineda said, these business owners count on Mexican consumers. Though the nation as a whole runs a significant trade deficit with its neighbor to the south each year, Pineda say that plastics works the other way around.

“We have a trade surplus with Mexico. It’s the plastics industry’s biggest market, $16.8 billion…last year,” he said. “It would be unthinkable for Mexico to not retaliate” with tariffs of its own, he says, jeopardizing the primary source of profit for an industry that keeps roughly a million Americans working.

Within that million-person direct workforce, Pineda has estimated that about 175,000 plastics jobs are directly supported by exports to Canada and Mexico. The industry has pointed to that figure — which comes disproportionately from red states, but touches all 50 of them — in urging passage of a new trilateral trade agreement.

It’s unclear how exactly Trump’s tariffs will affect that group, which is roughly one in every six plastics employees nationwide.

It’s not that every one of those jobs is doomed, of course. “We’re not saying they’re at total risk,” Pineda said, “but eventually [companies] would not be able to sustain their current level of employment.”

The figures provide a sketch of how Trump’s decision to expand his trade war onto a second front creates a direct and unnecessary headwind for significant job-creator types, including in states he narrowly won on his way to the White House in 2016.

CREDIT: Plastics Industry Association

The more thinly distributed nature of plastics employment and the smaller dollar figures associated with it tend to mask its role in hundreds of local economies. But the communities where plastics is a major source of employment are facing the same kind of threat that’s famously gutted communities like Lordstown, Ohio.

Not all jobs are created equal, as anyone who found themselves forced into part-time retail jobs by the lingering high unemployment levels of the slow Obama-era recovery knows well. The types of work that plastics manufacturing creates tend to pay substantially better wages than service and retail jobs.

Which makes the prospect of factories losing orders and cutting shifts a huge problem for everyone living around them, whether or not they work for the local plastic widget-maker. If jobs are lost to the tariffs, spending at grocers and local shops will drop off correspondingly.

Economists hold varying specific views on just how weak or strong these ‘virtuous cycles’ are for different categories of work. But by Economic Policy Institute economist Josh Bivens’ calculus, the plastics manufacturing business has a nearly three-to-one multiplier effect on local employment.

If a hundred people lost their plastics jobs in a given community, Bivens’ figures suggest, 278 others would soon be out of work as an indirect consequence. The numbers are stronger for other non-durable goods manufacturing, and strongest for manufacturing work linked to agriculture. But plastics beats the hell out of retail, food service, and other low-wage fields that have become primary employers in some economically depressed regions.

With profit margins already thin and competitive pressures already ratcheted up even before Trump’s tariffs start to turn the screws, Pineda said, factory owners and trading partners will generally not have room to absorb this arbitrary rewriting of their business models.

“There would definitely be job loss,” Pineda said. “It’s going to produce a lot of strain on local communities if the cost of doing business with Mexico is now higher.”




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