Trade war: NJ has $920 million at risk, Chamber of Commerce says

Michael L. Diamond | Asbury Park Press

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Correction: New Jersey has $920 million at risk if foreign countries retaliate with trade tariffs, a report says. The dollar amount was incorrect in the original version of this story.

New Jersey has $920 million and more than 1 million jobs on the line if foreign countries retaliate against the Trump administration's trade tariffs, the U.S. Chamber of Commerce said in a new report.

The products include $166 million in chemicals sold to Canada; $94 million in cosmetics sold to Europe; and $19 million in prepared food sold to Mexico, the business group said Monday.

"Tariffs that beget tariffs that beget more tariffs only lead to a trade war that will cost American jobs and economic growth,” said Thomas J. Donohue, the chamber's president and chief executive officer.

The Trump administration is imposing tariffs on hundreds of products imported from China, and on aluminum and steel imported from the European Union, Mexico and Canada.

It was designed to make American-made products more competitive in the global marketplace.

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But it has prompted trading partners to retaliate with sweeping penalties against U.S.-made products including motorcycles, steel, bourbon and jeans. Some $75 billion worth of U.S. exports are subject to retaliatory tariffs this week.

Observers are increasingly worried this round of tariffs could cascade, leading to higher prices on consumer goods and derailing a record-long economic expansion. Construction activity is picking up in New Jersey. See the video above for one giant project on deck.

"The cost of doing business is rising, and the (retaliation) on products is really going to hurt New Jersey businesses," said Thomas Prusa, an economics professor at Rutgers University in New Brunswick.

Business groups say the tariffs are likely to backfire. Motorcycle manufacturers Harley-Davidson and Polaris Industries, for example, have warned that they could shift production from the U.S. to plants overseas.

But even companies that don't export are getting caught in the fray. New Jersey Iron in Jackson is a steel fabricator whose products are used in office buildings, warehouses, car dealerships and nursing homes.

Since November, tube prices increased 20 cents a pound, beams increased 14 cents a pound and plate increased 10 cents a pound, adding thousands of dollars to the cost of a construction project, said Mark Karpinsky, the company's vice president.

It also adds uncertainty. “Everything is done so far in advance," Karpinsky said. "They place an order for hundreds of millions of dollars of steel in January and it comes in three months later. That’s one of the hard things.”

Other New Jersey companies could get hit more directly. The chamber report showed the retaliatory tariffs threaten $920 million in New Jersey exports, ranking 18th nationwide.

That represents just a fraction of the state's $591.8 billion economy. And other states have far more at risk.

The top five: Washington, Louisiana, California, Texas and Illinois.

But the chamber noted trade has a ripple effect that supports nearly 1.2 million New Jersey jobs. And another 245,000 New Jersey jobs are supported by foreign investment.

USA Today contributed to this story.

Michael L. Diamond; @mdiamondapp; 732-643-4038; mdiamond@gannettnj.com