EDITORIAL: How President Donald Trump’s tariffs will hurt Illinois

Folks in Illinois will feel the pain of President Donald Trump’s ill-advised tariffs on steel and aluminum imports when they spring for a six-pack of beer or soda pop. Prices are sure to go up.

That’s not the worst of it. Farmers in our state are bracing for a trade war that could result in tariffs on Illinois’ agricultural exports — we’re talking about soybeans, corn and pork. Retaliatory tariffs could send their industry into a tailspin.

Illinois has every reason to be unhappy with Trump’s tariffs. He will impose a 25 percent tariff on steel imports and 10 percent on aluminum, effective in two weeks, he announced Thursday.

The tax on steel imports will be a terrific boost, no doubt, to our steel mills. This is very good news for the people in downstate Granite City. United States Steel Corp. said Wednesday it plans to bring back 500 workers at its steelmaking factory there. In fall 2015, the company idled the Granite City plant and laid off 2,000 workers.

But gains for steel and aluminum companies won’t offset huge losses sure to come in other parts of the manufacturing industry. The consulting firm Trade Partnership Worldwide LLC said in a report released this week that, nationally, Trump’s tariffs will result in 33,464 more jobs in the U.S. steel and non-ferrous metals industries. In the rest of the economy, 179,334 jobs would be lost. The report didn’t take into account potential losses if other countries retaliate.

“It creates winners and losers,” Mark Denzler, vice president and chief operating officer of the Illinois Manufacturers’ Association, told us of Trump’s tariffs.

Heavy equipment companies based in Illinois, such as John Deere and Caterpillar, will feel the pain of higher steel prices. Amy Campbell, director of investor relations for Caterpillar, told Reuters the company would be at a disadvantage against foreign competitors. Caterpillar sells more than half its machines outside the U.S.

Fiscal earnings in 2019 for Caterpillar could drop by 6 percent and John Deere by 9 percent, Reuters reported, citing an analysis by JP Morgan.

The auto industry also could take a hit that would be felt by Illinois workers and possibly consumers if they get socked with higher prices. That’s bad news for Ford Motor Co.’s plants on Chicago’s Far Southwest Side and in Chicago Heights. It could also be rough for some 5,000 workers at the Belvidere Assembly Plant near Rockford that manufactures Fiat Chrysler cars.

For now, Mexico and Canada are exempt from the tariffs that are expected to take effect in two weeks. That’s a good thing for Illinois, which imports about a third of its steel and aluminum from those countries through the North American Free Trade Agreement. It’s hard to say how long the exemption for those countries will last, especially if renegotiation of NAFTA turns contentious.

As bad as things could be for a chunk of the manufacturing industry in Illinois, things could be worse for farmers.

If countries retaliate with their own tariffs on goods from the U.S., Illinois’ agricultural sector will pay a steep price. “Exports represent our biggest demand driver,” Mark Gebhards, executive director of governmental affairs and commodities at the Illinois Farm Bureau, told us.

According to the farm bureau, 31 percent of Illinois’ soybean production went to China in 2016. “That’s a huge one,” Gebhards said.

If China decides to spurn Illinois, farmers in Brazil and Argentina would be more than happy to supply it with soybeans. “If I’m in Brazil or Argentina, I’m watching closely to see which door opens for us,” Gebhards said.

In agriculture, as in manufacturing, there is essential trade with Mexico and Canada. About 40 percent of Illinois corn production goes south of the border. NAFTA has been good to Illinois farmers. For now, that is safe.

But Gebhards and the farmers he represents can’t rest easy. Our mercurial president could make their jobs tougher than ever.

Send letters to: letters@suntimes.com