An automobile tariffs study from MTSU's Business and Economic Research Center shows that the Volunteer State's largest manufacturing sector would take a noticeable hit if President Donald Trump moves forward with threats to impose such sanctions on trade partners.
The new Global Commerce study on "The Impact of Automotive Tariffs on the Tennessee Economy" looks at the impact on the Tennessee economy under a range of possible tariffs imposed on automotive imports.
Study author Steven Livingston, BERC associate director and a professor of political science and international relations at MTSU, notes that Trump has continued to threaten auto tariffs on some trade partners, including at this year's World Economic Forum in Davos, Switzerland.
"So the auto industry is not out of the woods," Livingston said. "Auto tariffs may very likely rise to the top of the trade agenda."
Livingston estimates that between 70,000 and 100,000 Tennesseans work in the auto industry in some capacity, with production value above $40 billion for the state's largest export sector.
View the full study at https://www.mtsu.edu/globalcommerce/auto_tariffs.php.
Livingston's key takeaways from the study:
- Vehicles manufactured in Tennessee would increase in price from around $1,500 to $5,000, depending upon the specific model.
- The increased costs associated with the tariffs will lead to production declines across the entire automotive supply chain valued between $365 million and $2.9 billion, depending upon the severity of the tariffs.
- The result would be the loss of between $510 million and $4 billion to the total state economy, again depending upon the severity of the tariffs.
- There would be around 1,000 job losses associated with the "mildest" tariffs and almost 8,000 with more severe tariffs.
- Over the longer-run, some of these losses would be recovered as portions of the supply chained adjusted but it would not be enough to recoup the losses.