Tariffs recently announced by President Donald Trump will have uncertain but far-reaching impacts across Oregon, kicking off immediate price increases while likely benefitting some sectors in the longer term, according to local economists. Experts expect prices of everyday products such as produc e, electronics and clothing to increase but think it is too early to tell which will be impacted most. “The funny thing about tariffs is you get the pain upfront and the economic benefits take longer to show up,” said Carl Ricadonna, the state’s chief economist. On Wednesday, Trump announced a 10% tariff on all imported goods to begin Saturday, April 5, plus additional tariffs on approximately 60 countries to take effect April 9. Some countries such as China, Vietnam and Cambodia have been hit by tariffs over 40%.  Some countries have already retaliated against the United States. The European Union, for example, announced tariffs up to 50% on American products such as motorcycles and bourbon. The constellation of European countries announced that it hopes to negotiate with Trump before their tariffs go into effect in about a week.  Canada threatened to retaliate, and China reacted forcefully with its own stiff tariffs on imported American goods. How do tariffs work? Tariffs are taxes paid by importers for goods they bring into the country. The money goes to the U.S. government. They are typically intended to strengthen domestic production and make the country less reliant on foreign products.  Tariffs make imported products more expensive because importing businesses tend to pass along some or all of their increased tariff costs to American buyers. Proponents of such tariffs say that they can make U.S. products more attractive and in turn spur more production in the long run. That bolsters employment and the overall economy, they say. It is very likely there will be positive impacts on employment or income in some business sectors, but it is unclear how significant they will be or whether they will outweigh the rise in prices, Ricadonna said. However, tariffs can also slow economic development and decrease the buying power of those who rely on imported agricultural products, electronics, machinery, and other commodities, said Yan Liang, an economics professor at Willamette University. She specializes in international economics, trade and development.  Ricadonna said the U.S. historically has had very low tariffs on imported products, which makes the impacts of Trump’s tariffs less clear.  “We haven’t really seen anything of this magnitude in recent economic history so it’s very hard to look to past precedents,” he said. Ricadonna said prices didn’t rise much due to tariffs during Trump’s first term, but those tariffs were much lower and more gradual. This time, costs are likely to increase because of larger and more sudden tariffs. Trump has announced new tariffs several times since taking office only to scale them back or lift them following pressure from Republicans in Congress or U.S. allies. That history is leading to more uncertainty over the latest announcement, said Erik Andersson, president of Salem’s Strategic Economic Development Corp. “There is this feeling that some of this could go away just as easily as it came here depending on political negotiations. As a business you just feel a little bit helpless, like a ping pong ball being hit back and forth,” Andersson said. Andersson said local businesses have been bracing for tariffs, with some trying to shore up supply chains or stock up on imported goods before they become more expensive. The organization works to recruit and retain businesses in the mid-Willamette Valley. Andersson said supports the goal of boosting domestic industry, but said trade and production is complex and it’s difficult to radically and quickly hift course. “You can’t put a plant up overnight or even within a few months,” he said. Many U.S. factories, including those in the Salem area, rely on imported raw materials which will become more expensive. “It does feel like something that could be an effective long-term strategy,” Andersson said of the tariffs. “In the short term it just throws a lot of chaos into everything.” SEDCOR leaders will reach out to regional businesses to assess how they’re responding to tariffs, he said. Most economic data tracking such impacts is often a month or two behind, which makes it harder to track the impacts of Trump’s tariffs, Ricadonna said. Even domestic producers may not be able to increase economic output to keep up with demand as almost all rely heavily on imports, Liang said. She used the example of Coca-Cola cans getting more expensive because even though the drink is produced in the U.S. the aluminium for the can may not be. In many cases, companies may also be unable to easily buy or upgrade their machinery since they could be made of imported materials, Liang said. Oregon relies heavily on imported products from Asian countries such as Vietnam, South Korea and China, all of which are facing high tariffs. Nike, one of the largest employers in the state, may be impacted more substantially than other companies as almost all of its products are manufactured overseas and domestic production cannot be developed overnight, Liang said.  Impacts on price may be visible very soon and some car producers are already increasing the prices of their inventory as many consumers rush to buy new vehicles, Liang said. Tariffs may also cause American companies to lose market share to European and Asian firms who turn away from U.S. suppliers because of the tariffs. Consumers may see the impacts of tariffs in declining values of investments and retirement accounts as stock markets have been dropping significantly since Trump’s announcement, Ricadonna said. Financial advisors are generally urging consumers to avoid drastic shifts in response. “It’s wise for business owners to pay attention and try to understand current and potential impacts from the tariffs while remaining calm as they strategize,” Brad Compton, president of Pioneer Trust Bank, said in an email. He said volatility is ahead as markets react to new tariffs, but he was confident in time matters would even out as new norms are established. Trump may be using tariffs as a negotiating tool to pressure other countries to lower theirs and he may modify them if foreign powers comply with his demands, Liang said. However, she and other economists have pointed out that Trump’s claims that foreign countries have very high tariffs on U.S. products appear exaggerated due to a flawed calculation. Although the long-term effects of Trump’s tariffs are yet to be seen, the announcement is a “major event” not only in economics but also geopolitics, Liang said. It may also play an important role in the midterm elections next year, she said. Possible impacts on agriculture Oregon is heavily dependent on export markets, particularly for agriculture. The state exported over $1.7 billion in agricultural products last year, according to Business Oregon. Jeff Reimer, an agricultural economist and professor at Oregon State University, said Oregon is uniquely situated in agricultural trade because of its high agricultural production. Some agricultural commodities, such as white wheat, are almost exclusively destined to international markets, especially in Asia.  Ferrero Rocher chocolates are manufactured in Italy with an Oregon hazelnut at the center of each. Andersson recalled going to dinner while traveling in Sweden and seeing a wine rack stocked with bottles from the Willamette Valley. Such exports may decline if other countries levy retaliatory tariffs on products and drive down demand for U.S. goods, Reimer said. Tariffs on agricultural products not only impact farmers and farm workers but also those in adjacent positions, including input suppliers, warehouse employees, and distributors, Reimer said. Despite the likely negative effects of Trump’s tariffs on demand for agricultural products, the U.S. is in an advantaged position internationally because of a highly trained workforce, climate, fertile soil and trade infrastructure that some other countries may not have, Reimer said. Oregon especially excels in the production of hazelnuts, berries, nursery products and seed crops, Reimer said. “We are set up to supply the world with agricultural products, it’s one of the many things the United States has a comparative advantage in,” although trade wars are often detrimental to producers in all countries, he said. Andersson said some agricultural businesses could benefit if tariffs cause consumers to switch to buying local products at the grocery store. “Maybe it’s time I tried Painted Hills beef because the stuff that’s coming in from Argentina might be more expensive,” Andersson said. Contact reporter Alan Cohen: alan.salemreporter@gmail.com. A MOMENT MORE, PLEASE – If you found this story useful, consider subscribing to Salem Reporter if you don’t already. Work such as this, done by local professionals, depends on community support from subscribers. Please take a moment and sign up now – easy and secure: SUBSCRIBE. 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