US towns may become casualties of Trump’s trade war with China
A CHINESE company’s announcement two years ago that it would spend more than US$1 billion and hire hundreds of workers for a paper mill on the outskirts of this rural college town in the US state of Arkansas was seen as a much-needed shot in the arm for the region’s economy.
A web video promoting Arkadelphia — “It’s a great place to call home!” — continues to tout the Sun Paper project and its potential to generate jobs and boost development. But optimism has been giving way to concern in recent months amid President Donald Trump’s escalating trade dispute with China.
The threat of a full-blown trade war has delayed the project further and prompted the state’s governor to send his top economic development official to China to make sure it stays on track. It also has caused other Chinese companies considering investing in Arkansas to put their plans on hold.
“It’s like a dark cloud hanging over the future of the project,” Stephen Bell, the president and chief executive officer of the Arkadelphia Area Chamber of Commerce. “Right now, the clouds are off on the horizon. But I think no one knows where the trade situation is going right now.”
The uncertainty in Arkansas, where voters overwhelmingly supported Trump in the 2016 presidential election, highlights how US states are trying to ease the sting of the president’s threatened trade war by appealing directly to Chinese companies.
Those companies invested US$29 billion in the US last year, virtually all of which was related to corporate mergers and acquisitions, according to the research firm Rhodium Group. While that was down from a record US$46 billion in 2016, those investments remain crucial for local economies.
Trump’s trade dispute has squeezed US states and communities in at least two ways: It has slowed direct investment, as in Arkansas, and the retaliatory tariffs imposed by other countries have made it harder for local farmers and manufacturers to sell abroad.
Political leaders from both parties have objected. Governors from Nevada, Colorado, Massachusetts and North Carolina, for example, protested tariffs on imported solar-energy components, saying it would cost tens of thousands of US jobs. Trump went forward with those tariffs, anyway.
In Arkansas alone, retaliatory tariffs from China, the European Union, Mexico and Canada threaten US$339 million in exports, according to the US Chamber of Commerce.
The tariffs Trump imposed on China were estimated to add US$150 million to the original US$1.8 billion price tag of the Sun Paper plant in Arkadelphia, prompting the company to delay its plans.
State and local officials have been trying to reassure Sun Paper, with Governor Asa Hutchinson sending his top economic development adviser to China. The governor, a Republican, says the Trump administration has assured him it will work with them on tariff exemptions for the facility.
Officials expect the mill to employ 2,000 people during its construction and create an additional 1,000 jobs in the timber industry. The facility, once up and running, is expected to receive as many as 500 truckloads of timber per day.
State and local officials say they remain optimistic about the paper mill, but the governor says the trade fight isn’t good for luring new industry.