How Did the U.S-China Trade War Affect the State of Illinois?

6502 words (26 pages) Essay in Economics

08/02/20 Economics Reference this

Disclaimer: This work has been submitted by a student. This is not an example of the work produced by our Essay Writing Service. You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

A trade war is an economic conflict which is the result of protectionism where the Countries that participate impose tariffs to the other party. The increasing of protection leads the parties’ output to move toward an autarky position.

US-China Trade War:

Since 2018 the U.S and China are in a trade war by imposing tariffs between them.

On March 22, 2018, Trump signed a memorandum instructing the USTR to apply tariffs of $50 billion on Chinese goods because of Chinese theft of U.S intellectual property. In response to this, China’s Commerce Ministry imposed similar tariffs to US imports which started on July 6, 2018.

Top Industries in Illinois:

Geographic area name

2007 NAICS code

Meaning of 2007 NAICS code

Meaning of Type of operation or tax status code

Year

Number of establishments

Value of sales, shipments, receipts, revenue, or business done ($1,000)

Illinois

111

Crop Production (Corn)

Total

2012

36,898

8,258,574

Illinois

111

Crop Production (Corn)

Total

2007

38,668

7,073,343

Illinois

212

Mining (except oil and gas)

Total

2012

198

2,413,727

Illinois

212

Mining (except oil and gas)

Total

2007

222

2,039,202

Illinois

311

Food manufacturing

Total

2012

1,163

42,536,141

Illinois

311

Food manufacturing

Total

2007

1,149

33,717,737

Illinois

324

Petroleum and coal products manufacturing

Total

2012

82

43,034,784

Illinois

324

Petroleum and coal products manufacturing

Total

2007

85

34,692,899

Illinois

325

Chemical manufacturing

Total

2012

660

44,936,661

Illinois

325

Chemical manufacturing

Total

2007

714

34,289,623

Illinois

621

Ambulatory health care services

All establishments

2012

24,214

32,606,714

Illinois

621

Ambulatory health care services

All establishments

2007

22,585

26,994,829

Illinois

622

Hospitals

All establishments

2012

224

36,209,420

Illinois

622

Hospitals

All establishments

2007

223

30,691,406

Source: United States Census Bureau.

Top U.S. Exports (Origin of Movement) from Illinois

(Values in millions of dollars)

Rank

HS Code

Description

2017 Value

2018 Value

2017 % Share

2018 % Share

% Change, 2017 – 2018

Total Illinois Exports and % Share of U.S. Total

65,187

65,415

4.2

3.9

0.4

Total, Top 11 Commodities and % Share of State Total

22,021

22,070

33.8

33.7

0.2

1

271012

LT OILS, PREPS GT=70% PETRO

2,957

3,156

4.5

4.8

6.7

2

851762

MACH FOR RECP/CONVR/TRANS/R

1,338

1,508

2.1

2.3

12.7

3

300490

MEDICAMENTS NESOI, MEASURED DOSES, RETAIL PK NESOI

1,395

1,290

2.1

2

-7.6

4

870410

DUMPERS DESIGNED FOR OFF-HIGHWAY USE

1,275

1,280

2

2

0.4

5

851712

PHONES FOR CELLULAR NTWKS OR FOR OTH WIRELESS NTWK

1,235

1,238

1.9

1.9

0.3

6

300212

ANTISERA AND OTHER BLOOD FRACTIONS

669

1,222

1

1.9

82.6

7

880000

CIVILIAN AIRCRAFT, ENGINES, AND PARTS

1,036

1,154

1.6

1.8

11.4

8

120190

SOYBEANS, NESOI

2,066

1,070

3.2

1.6

-48.2

9

870324

PASS VEH SPK-IG INT COM RCPR P ENG > 3000 CC

1,204

1,030

1.8

1.6

-14.4

10

870899

PARTS AND ACCESSORIES OF MOTOR VEHICLES, NESOI

998

976

1.5

1.5

-2.2

11

100590

CORN (MAIZE), OTHER THAN SEED CORN

433

831

0.7

1.3

91.7

Source: United States Census Bureau

 

Total U.S. Exports (Origin of Movement) from Illinois

Top 5 Countries Based on 2018 Dollar Value

(Values in millions of dollars)

Rank

Country

2017 Value

2018 Value

2017 % Share

2018 % Share

% Change, 2017 – 2018

Total Illinois Exports and % Share of U.S Total

65,187

65,415

4.2

3.9

0.4

Total, top 5 Countries and % Share of State Total

58,143

58,560

89.2

89.5

0.7

1

Canada

17,695

17,636

27.1

27

-0.3

2

Mexico

9,876

10,188

15.1

15.6

3.2

3

China

5,271

3,438

8.1

5.3

-34.8

4

Germany

3,439

3,307

5.3

5.1

-3.8

5

Australia

2,614

3,181

4

4.9

21.7

Source: United States Census Bureau

Top U.S. Imports (Origin of Movement) from Illinois

Rank

HS Code

Description

2017 Value

2018 Value

2017 % Share

2018 % Share

% Change, 2017 – 2018

Total Illinois Exports and % Share of U.S. Total

136,099

157,402

5.8

6.2

15.7

Total, Top 10 Commodities and % Share of State Total

65,516

80,708

48.1

51.3

23.2

1

270900

CRUDE OIL FROM PETROLEUM AND BITUMINOUS MINERALS

20,190

25,487

14.8

16.2

26.2

2

851712

PHONES FOR CELLULAR NTWKS OR FOR OTH WIRELESS NTWK

11,829

15,089

8.7

9.6

27.6

3

880330

PARTS OF AIRPLANES OR HELICOPTERS, NESOI

6,849

7,942

5.0

5.0

16.0

4

847130

PORT DIGTL AUTOMATIC DA

3,721

5,797

2.7

3.7

55.8

5

300490

MEDICAMENTS NESOI, MEASURED DOSES, RETAIL PK NESOI

3,090

4,951

2.3

3.1

60.2

6

220300

BEER MADE FROM MALT

2,834

3,102

2.1

2.0

9.5

7

851762

MACH FOR RECP/CONVR/TRANS/R

1,800

2,597

1.3

1.7

44.3

8

841112

TURBOJETS OF A THRUST EXCEEDING 25 KN

1,787

2,312

1.3

1.5

29.4

9

853710

CONTROLS ETC W ELECT APPR

1,426

1,463

1.0

0.9

2.6

10

271121

NATURAL GAS, GASEOUS

1,317

1,256

1.0

0.8

-4.6

Source: United States Census Bureau

Total U.S. Imports (Origin of Movement) from Illinois

Top 5 Countries Based on 2018 Dollar Value

Rank

Country

2017 Value

2018 Value

2017 % Share

2018 % Share

% Change, 2017 – 2018

Total Illinois Imports and % Share of U.S Total

136,099

157,402

5.8

6.2

15.7

Total, top 5 Countries and % Share of State Total

129,131

150,258

94.9

95.5

16.4

1

China

31,994

40,883

23.5

26

27.8

2

Canada

32,039

38,056

23.5

24.2

18.8

3

Mexico

12,424

13,154

9.1

8.4

5.9

4

Japan

10,575

10,829

7.8

6.9

2.4

5

Germany

5,571

6,505

4.1

4.1

16.8

Source: United States Census Bureau

Products that the U.S has imposed a new 10%-25% tariff and are in the top industries in Illinois.

          Agriculture Industry

0709.99.45 Sweet corn, fresh or chilled 

0710.40.00 Sweet corn, uncooked or cooked by steaming or boiling in water, frozen 

1005.90.20 Yellow dent corn

1005.90.40 Corn (maize), other than seed and yellow dent corn 

1102.20.00 Corn (maize) flour 

1103.13.00 Groats and meal of corn (maize) 

1104.23.00 Grains of corn (maize), hulled, pearled, clipped, sliced, kibbled or otherwise worked , but not rolled or flaked 

1108.12.00 Corn (maize) starch 

2005.80.00 Sweet corn, prepared or preserved otherwise than by vinegar, acetic acid or sugar, not frozen

Unemployment Rate – Agricultural and Related Private Wage and Salary Worker

Series Id:    LNU04035109
Not Seasonally Adjusted
Series title:   (Unadj) Unemployment Rate – Agricultural and Related Private Wage and Salary Workers
Labor force status: Unemployment rate
Type of data:   Percent or rate
Age:       16 years and over
Class of worker:  Private wage and salary workers
Labor force experience: Experienced
Industry:     Agriculture, forestry, fishing, and hunting
 

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2018

10.0

9.6

9.7

9.0

5.8

7.2

5.9

7.2

4.1

4.1

6.7

8.6

2019

14.1

11.1

11.5

7.3

Source: Bureau of Labor Statistics.

As can be seen in the graph, Illinois’ Unemployment Rate in Agriculture reached its peak with 14.1 % of unemployment by January 2019.

          Manufacturing Area:

 

2007.10.00 Homogenized cooked preparations of fruit put up for retail sale as infant food or for dietetic purposes, in cont. not over 250 grams, net 

2007.91.10 Citrus fruit pastes and purees, being cooked preparations

2007.91.40 Orange marmalade

2007.99.05 Lingonberry and raspberry jams

2007.99.10 Strawberry jam 

2008.11.02 Peanut butter and paste, subject to gen. note 15 of the HTS 

2008.19.25 Pecans, otherwise prepared or preserved, nesoi 
2009.50.00 Tomato juice, concentrated or not concentrated 

2103.10.00 Soy sauce 
 

NSA:

Not

   Current

Seasonally

 

   Month:

Adjusted

 

   March

Jobs

 

    2019

Illinois Jobs:

Area

Industry Title

Series Code

Current Month(March 2019)

Previous Month (Feb 2019)

Year Ago

OTM Change

OTM Change %

OTM Change

OTY% Change

00000

Manufacturing

30000000

593,400

591,300

583,600

2,100

0.4

9,800

1.7

Source: Current Employment Statistics Program
 

The number of Jobs in the area of Manufacturing in the State of Illinois increased by almost 10 000 from March 2018 to March 2019.

          Mining:

 

2701.11.00 Coal, anthracite, whether or not pulverized, but not agglomerated

2701.12.00 Coal, bituminous, whether or not pulverized, but not agglomerated

2701.19.00 Coal, other than anthracite or bituminous, whether or not pulverized, but not agglomerated

2701.20.00 Coal, briquettes, ovoids and similar solid fuels manufactured from coal

2702.10.00 Lignite (excluding jet), whether or not pulverized, but not agglomerated

2702.20.00 Lignite (excluding jet), agglomerated
2703.00.00 Peat (including peat litter), whether or not agglomerated 
2713.11.00 Coke, petroleum, not calcined

2713.12.00 Coke, petroleum coke, calcined 

2713.20.00 Petroleum bitumen 
2901.21.00 Ethylene 
2901.22.00 Propene (Propylene) 

2902.20.00 Benzene 

2902.30.00 Toluene 
2902.41.00 o‐Xylene 
2914.11.10 Acetone, derived in whole or in part from cumene 
2926.10.00 Acrylonitrile 

2707.91.00 Creosote oils, from dist. of hi‐temp coal tar or wt. of aromatic exceeds nonaromatic 

2707.99.59 Phenols, nesoi 

2710.19.16 Kerosene type jet fuel from petroleum oils and oils of bitumin minerals (o/than crude) or preps. 70%+by wt. from petroleum oils.

2711.12.00 Propane, liquefied 

2712.10.00 Petroleum jelly 

2714.10.00 Bituminous or oil shale and tar sands 
2714.90.00 Bitumen and asphalt, natural; asphaltites and asphaltic rocks 
2712.90.20 Mineral waxes (i.e., paraffin w/ 0.75%+ oil, microcrystall. wax, slack lignite & peat waxes, ozokerite), obtained by synthesis 

NSA:

Not

   Current

Seasonally

 

   Month:

Adjusted

 

   March

Jobs

 

    2019

Illinois:

Area

Industry Title

Series Code

Current Month

Previous Month

Year Ago

OTM Change

OTM Change%

OTM Change

OTY% Change

00000

Mining

10000000

7,300

7,300

7,500

0

0.0

-200

-2.7

Source: Current Employment Statistics Program
 

The number of Jobs in the area of Mining in the State of Illinois decreased by 200 from March 2018 to March 2019.


 

Products that China has imposed a new 10%-25% tariff and are in the top industries in Illinois.

5 27011100 Anthracite coal, not agglomerated
7 27011290 Other bituminous coal, not agglomerated
8 27011900 Other coal, not agglomerated
9 27012000 Coal, briquettes, and similar solid fuels
10 27021000 Lignite coal
11 27022000 Lignite coal, agglomerated
12 27030000 Peat
13 27040010 Coke and semi coke
14 27040090 Coke by-product
62 27132000 Petroleum bitumen
69 29012100 Ethylene
70 29012200 Propene
17 27071000 Benzene
18 27072000 Toluene
19 27073000 Xylene
22 27079100 Creosote oils
23 27079910 Phenols
32 27101911 Aviation kerosene
54 27121000 Petroleum jelly
64 27141000 Bituminous or oil shale and tar sands
66 27149020 Emulsified bitumen and asphalt
76 29141100 Acetone
78 29261000 Acrylonitrile
56 27129010 Microcrystalline petroleum wax
60 27131210 Petroleum coke, calcined, containing by weight less than 0.8 percent of sulfur.
61 27131290 Other petroleum coke, calcined.

          Has Illinois been negatively affected by the Chinese 25% tariffs on Soy Beans, coffee, whiskey and pork?

Soybeans

Illinois is the No. 1 producer of Soybeans in the U.S. The tariff of 25% imposed by China the last year made Soybean Exports from Illinois drop by 50% which represented a loss of $1 billion for Illinois. By knowing this, the U.S Department of Agriculture interfered and helped Illinois Soybeans producers by offering a 12$ billion national aid packages.
 

Whiskey

Whiskey has also decreased in sales by the imposing of tariffs by China. The 25% of tariffs represent the 60% U.S Whiskey Exports. By the second half of 2018, the sales dropped down considerably. In 2017, before the trade war started, the overall growth of whiskey exports was of 16% but by 2018 the growth was only 5%

Pork:

The tariff imposed on pork by China also affected Illinois since U.S farmers have gotten more efficient at raising pigs through the years. This meaning that the production of pigs has increased but the demand not. Because of this many Illinois pork farmers had to reduce the price of the porks that they sell resulting in a loss for them.

Tariffs on import of Aluminum and Steel

 

Tariffs on steel and the tax on aluminum didn’t affect Illinois as much as their neighbor states as demonstrated in the graph above. The reason for this is because Trump administration has granted hundreds of companies’ permission to waive some of these taxes on imports. In 2018 after tariffs were introduced a lot of companies put requests for tariff exemption to avoid paying the 25% tariff on steel and taxes on aluminum from which 370 companies nationwide were approved. This exemption allowed 4.1 million tons of foreign steel to be imported, about 8 percent of the total coming from China and 30% from japan. In Illinois 64 companies requested the tariffs waiver but for the moment only 37% of those 64 have been approved the other are pending. One of the companies that was given the waiver was Shelbyville Sta-Rite which is a manufacturer of hair accessories and could import 40,000 kilograms of steel from China. According to the CEO of Sta-Rite is hard to find good quality products for their need in United States for that reason they go shopping out the country.

 

Illinois is the second largest importer of steel and aluminum. 41% of their steel comes from Brazil and 29% of its aluminum comes from China. However, some states production relies more on steel and aluminum measured by the share of those products that account for total imports. The tariffs set by Trump administration will most likely have a greater impact on firms that rely on steel and aluminum imports. As shown in the graph Illinois is the least affected from the neighbor states, Missouri, Louisiana, Connecticut, and Maryland, are the most affected by the tariffs because they have a larger share of aluminum imports used to produce goods. Oil and gas drillers and petrochemical producers in those states are heavily affected on the imports of steel and aluminum to supply their business needs.

Tariffs on Solar Panels and Washing Machines

 

When Tariffs were applied to washing machines in 2018, it had a positive impact in some sectors of the economy, business saw an opportunity to increase prices on these products and they created more jobs to increase productivity. One of the reasons why jobs were created was because firms that were doing business in other countries came back to United States knowing that they could use tariffs as an excuse to increase prices.

Find out how UKEssays.com can help you!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our services

Even with the 30% on Solar panel imported parts the growth of the industry in Illinois is constant as seem in the picture below while other saw a decline on employment, Illinois saw a growth of jobs created in this industry. The Illinois Solar growth is tied to the Future Energy Jobs Act, which is a law that was passed in 2016 that required the state to increase its use of renewable energy. Last year 1,308 new jobs were created, and it saw an 37% increase in employment from previous year. This new project is leading to an increase of labor demand because the state before this had almost no solar panels. Another reason for the positive impact of solar panels in Illinois is that due to advancement in technology solar manufacturing has become less expensive to produced. The cost of solar panels has fallen between 2 and 6%.

Foreign Direct Investment (FDI) in the state of Illinois

 

The state of Illinois is home to more than 1,900 foreign companies. Illinois is the largest exporting state in the Midwest and the fifth largest exporting state in the U.S. The state’s international population includes more than forty distinct ethnic communities with populations over 35,000 and more than 80 foreign consulates help to facilitate employee relocation for global firms.

 

Illinois Central location in North America, together with its world class infrastructure and skilled, diverse workforce continues to attract internationational companies in different sectors to do business in the state. On octuber of last year Elgin- Harting a german company announcesd a 6 million expansion, which talks of the good relationship that the state has with foreing investors.

 

Country

Jobs

1

UK (England, Scotland, Wales, Northern Ireland)

63,564

2

Japan

47,232

3

Germany

36,702

4

Canada

36,143

5

France

20,018

 

 

Top Countries for FDI in Illinois

 

Source: U.S. Department of Commerce, International Trade Association
 

Foreign Direct Investement (FDI) in illinois is key in keeping the growth of their economy. FDI in Illinois generates more than $100 billions in revenues and employs more than 340,000 workers. 37% of all those employed by international investors are in the manufacturing sector. Among all international employers the United Kingdom employs the most. England, Scotland, Wales, Northern Ireland together generate more than 63,000 jobs, followed by Japan. In the past 5 years FDi has had an increase of 26% and because of their good relationship with the United Kindom exports and imports to an from Europe has increase.

Industries affected by taxes imposed to imports

 

Due to Trump administration’s tariffs on metal from China, Some business that import goods from China are moving to foreign countries were labor is cheaper and tariffs are less aggressive. Such is the case of Stack-On a manufacturer of storages safes which is set to move to Mexico to avoid tariffs. The company already has a plant in China and Mexico, and its only U.S factories were the two in the Chicago are. But due to the high prices of their supplies they can not afford to run the business with they costs.

Another Manufacturer that is closing a plant in Illinois is MV Industries, what they basically do is produce auto parts. Illinois meat producers is also stand to lose $100 million annually as result of tariffs.

Principal manufacturing businesses has seen significant price increase due to tariffs. Due to the price increase many customers and business have move production to other parts of the world such as canada and Europe. Other businesses affected were pork producers which exports nearly 6.5 million worth of pork products.

The Economics of Illinois

 

Median Household income in Illinois is $62, 992. This is in comparison to a median income of $60,960 in 2016,which represents a annual growth of 3.33%. The economy of Illinois Employs 6.01m people. The largest industries in Illinois are restaurants & Food Services.The highest paying industries are securities, commodities, funds, and other financial investments. As shown in the graph below males in Illinois earn 1.37 times more in salaries than what females earn, that shows the income innequality that exists in Illinois. The most common job groups, by number of people living in Illinois, are Miscellaneous managers (162,072 people), Driver/sales workers & truck drivers (154,612 people), and Elementary & middle school teachers (140,268 people). This chart illustrates the share breakdown of the primary jobs held by residents of Illinois.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overall Effect of US-China Trade war

As the nation’s #1 producer of Soybeans, Illinois were the most affected when China, the largest buyer of this product impose 25% tariffs on US exports. Exports from Illinois fell by half last year, a loss of $1 billion, according to the U.S Census data. Prices increased and the demand decreased. The tariffs on Steel and aluminum has been a positive impact in overall because most of the consumers who used to buy overseas metal parts are not turning to American manufacturers to supply their needs. Profits rise from previous year as imports declined. Auto part suppliers were heavily affected because they rely on imports from China or other countries with cheaper labor. They employed nearly 900,000 people nationally and 40.000 in Illinois Based on my research I would not suggest congress to pass the trade agreement with China, one of the reason is that even though it might bring higher paying jobs to United States, it will have a negative impact in lower skill workers which are not qualified for those jobs. Also, tariffs increase prices which will decrease the consumer’s buying power. We are better off in an open market where we can choose what we want to buy at the price that we can afford giving each financial situation.

Bibliography

Cite This Work

To export a reference to this article please select a referencing style below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please: