As the debate over tariffs continues to dominate political discussions, Kansas finds itself caught in the crossfire of these trade policies. Though touted as a way to protect American industries, tariffs often act as hidden taxes that ultimately burden consumers and largely restrain economic growth and prosperity in the state.
Kansas, known for its strong agricultural and manufacturing sectors, is particularly vulnerable to the economic impacts of tariffs. While tariffs may seem like a tool to give local products a competitive edge by making foreign goods more expensive, the reality is that these costs are passed down, increasing the prices of goods essential to Kansas families and industries. This isn’t just theoretical; it affects every Kansan, from the prices paid for everyday goods to the costs of doing business by the tariff rate over time.
Kansas’ Trade Dynamics
In 2023, Kansas exported over $14 billion worth of goods, making it the 32nd largest exporter among U.S. states. Especially given the overall size of the state, Kansas is punching above its weight. The state’s top exports included aircraft parts ($2.63 billion), fresh or chilled boneless beef cuts ($970 million), maize/corn ($537 million), frozen beef cuts ($422 million), and soybeans ($365 million). These figures highlight Kansas’ vital role in both aerospace and agriculture. On the import side, Kansas brought in $13.4 billion in goods, ranking as the 35th largest importer in the U.S. Significant imports included unspecified commodities ($1.54 billion), aircraft parts ($671 million), turbo-jet engines ($403 million), communication apparatus ($331 million), and electrical machinery ($302 million). This trade activity underscores the importance of imports in supporting Kansas’ diverse industries, particularly in aerospace and technology.
Despite Kansas’ robust trade performance, the state is not immune to the economic strain caused by tariffs. These trade barriers increase the cost of imported materials and components crucial to its industries. While trade deficits often draw negative attention, the focus should be on Kansas’ overall trade volume of $27.4 billion, which supports jobs and drives economic activity across industries and the state. Trade is not just about deficits or surpluses; it’s about the mutually beneficial exchanges that allow Kansans to thrive.
The Economic Impact of Tariffs
Tariffs, by design, impose a tax on imported goods, impacting both producers and consumers. This added cost reduces demand for foreign currencies while increasing demand for the U.S. dollar, especially when federal deficits push interest rates higher. A stronger dollar can mitigate some price increases caused by tariffs but also disrupt supply chains and raise production costs. As the dollar appreciates, Kansas’ exports become more expensive for international buyers, reducing demand for these goods abroad. This can lead to a decline in Kansas’ export volume, undermining efforts to balance trade deficits. Additionally, tariffs often trigger retaliatory measures from other countries, further complicating trade relationships. For Kansas, where global trade is integral to the economy, such disruptions can have serious consequences.
Although tariffs don’t directly cause inflation, as the Federal Reserve creates inflation by printing too much money, tariffs increase prices on certain goods by the amount of the tax hikes on them over time. These higher costs ripple through the supply chain, affecting a broad range of products. As noted by the Tax Foundation, tariffs can also lead to reduced economic output, lower wages, and job losses in affected industries, illustrating these policies’ broader negative effects on Kansas.
Strengthening Kansas’ Economic Future
Kansas must proactively enhance its competitiveness in response to federal trade policy uncertainties. Of course, the state cannot set interest rates or tariff policies. The state should focus on policies that promote growth through fiscal responsibility—reducing unnecessary government spending, lowering taxes, and aligning workforce training with the needs of key industries like agriculture and aerospace. A skilled workforce is essential for attracting businesses and supporting Kansas’ existing industries.
Additionally, reducing the regulatory burden on businesses can help Kansas offset some negative impacts of federal tariffs. Creating a more business-friendly environment encourages investment and job creation, ensuring long-term economic resilience. Expanding trade relationships and exploring new markets is another critical strategy. Diversifying export destinations reduces reliance on a few large markets, mitigating risks from global trade tensions. It’s nice that many state leaders attend the occasional international air show or economic confab, but these taxpayer-funded trips don’t help “sell” Kansas. However, sound economic policy will “sell” the state, making it easier for a business to expand in The Sunflower State than in The Palmetto State.
Finally, Kansas leaders should advocate for federal trade policies that support free trade and minimize reliance on tariffs. Supporting global trade agreements will help secure Kansas’s prosperous future and contribute to a stronger national economy.
Conclusion
While tariffs aim to protect American industries, they function as a tax that burdens consumers and businesses. For Kansas, which is deeply tied to global trade, the negative impacts of tariffs are particularly significant. By focusing on fiscal responsibility, enhancing competitiveness, and addressing domestic challenges, Kansas can ensure its industries remain strong, its economy resilient, and its people prosperous in the global market.
