Donald Trump’s tough talk on trade – vowing to rip up international trade deals and stand up against foreign cheating to bring jobs back to Americans – has played a large part in propelling him toward the Republican nomination.
It clearly has resonated in South Carolina as well, where he won 32.5 percent of the vote and all 50 delegates in the February primary. But in a state that has heavily leveraged globalization and foreign investment into jobs, many are saying that if economically distressed voters look backward, it could harm the state’s economy.
22% Share of South Carolina jobs supported by international trade
“I think there’s a bit of a nostalgia sometimes for the jobs the state used to rely on,” said University of South Carolina economics professor William Hauk, explaining how the state “was hammered” a few decades ago by losses to the textile industry.
“But many haven’t noticed that lots of new jobs are benefiting the state,” he said.
Like the rest of the country, South Carolina has suffered the loss of blue-collar jobs in recent years, but it has benefited more than almost any other state from foreign investment. U.S. subsidiaries of global companies are writing paychecks for 8 percent of South Carolina’s workforce in the private sector – the highest in the country – and providing 127,300 jobs according to data from the U.S. Bureau of Economic Analysis.
Focusing on creating new jobs, including through foreign direct investment and free trade, would do more for the state than Trump’s protectionist policies to bring back the old ones to South Carolina, some analysts say.
Foreign corporations would dramatically scale back their plans to invest in U.S. states like South Carolina if Donald Trump is elected president, according to a survey conducted for global management consulting firm A.T. Kearney in January. It found that the election of a populist candidate – such as Donald Trump or Bernie Sanders – would reduce by 13 percent the number of firms planning to increase their investment in the United States.
“They are never coming back. If (these jobs) are not in China or Mexico they’ll be somewhere else soon,” said University of South Carolina economics professor John McDermott. “It’s an era that is gone for good, so we’ve got to compete in the global marketplace and South Carolina has done a really great job at it.”
In the past five years, South Carolina’s employment via foreign direct investment has gone up by 13.4 percent, with over half of those jobs being in the manufacturing sector.
“I think we can absolutely go too far in being protectionist, because it’s so easy to see jobs that are lost to Mexico and China and harder to see the jobs that are gained and insourced to South Carolina through foreign companies like Volvo or Continental Tire,” McDermott said.
127,300 Jobs in South Carolina were created by U.S. subsidiaries of foreign companies
In 2014 alone, 1,233 international firms from 42 countries invested $5.1 billion in the Palmetto State. German automaker BMW announced a billion-dollar investment in its Upstate plant in March, and Volvo selected South Carolina for its first American factory last year, investing $500 million in a facility in Berkeley County that will create 2,500 jobs.
Similarly, international trade is crucial to South Carolina’s economy, supporting one in five jobs in the state in 2013.
“We’re punching quite above our weight in terms of export,” Hauk said. “Obviously someone like Donald Trump is not worried so much about that, but more about protecting jobs from import trade. However trade is a two-way street, and if you make it harder to import, you make it harder to export.”
China, which has been Trump’s main target, is South Carolina’s top destination for exports with nearly $4.3 billion in 2015, according to the S.C. Commerce Department.
There also are 85,763 jobs in the state that are dependent on trade with Mexico, Trump’s second most-talked-about foreign trade villain, centering on plastics and rubber products, chemicals and machinery, according to the U.S. Department of Commerce.
Germany, France and Japan are the biggest foreign investors in South Carolina.
“Trump, by being against free trade, would put some real livelihoods in danger,” McDermott said. “I don’t think we’re there yet, but it’s worrisome if Trump does try to reduce the amount of free trade. We really do underestimate how much South Carolina has benefited it.”
No president can reverse globalization, but as president, Trump could have the authority to put in place significant trade barriers.
“When Trump is elected there will be the kind of free and fair trade policy that is conducive to strengthening investment in South Carolina,” said Ed McMullen, a Columbia public relations executive who served as Trump's S.C. state chairman. He emphasized ‘fair’ and added that “free trade zealots” are holding on to a policy that stopped working decades ago.
“Free trade at all costs, in the world that we live in today, doesn’t work anymore,” he said. “As Americans we abide by free trade treaties while China and others break them – that’s not free trade that’s foolish trade.”
A Moody’s report in June said that Trump’s declared 45 percent tariff on goods from China and a 35 percent tariff on goods from Mexico would have a negative impact on the U.S. economy that could be comparable to the Great Recession.
“Broadly, Mr. Trump’s economic proposals will result in a more isolated U.S. economy,” the report says. “Cross-border trade and immigration will be significantly diminished, and with less trade and immigration, foreign direct investment will also be reduced.”
Trump’s campaign did not return request for comment on the possible impact of protectionist trade policies on foreign investment.
As Trump’s rhetoric on trade has heated up, last month calling the Trans-Pacific Partnership a “rape of our country,” he has drawn increasing criticism from national business leaders and organizations that traditionally support Republican candidates.
The U.S. Chamber of Commerce, which spends millions of dollars in federal elections, almost exclusively for Republicans, has been vociferous in its criticism of Trump’s plans.
“Under Trump’s trade plans, we would see higher prices, fewer jobs, and a weaker economy,” it said on Twitter during one of Trump’s trade speeches last month, with an analysis that his proposed tariffs “would strip us of at least 3.5 million jobs.”
Jay Timmons, CEO of the National Association of Manufacturers, also criticized Trump’s stance on trade in a series of tweets with the hashtag #MakeAmericaTradeAgain.
Although the analyses have taken Trump’s policies at face value, many business leaders in the state are taking the gloomy forecast with a grain of salt.
“We are becoming so globally interdependent on each other that it would still be very difficult to sever what has been built,” said David Cuda, the director of corporate solutions at the South Carolina office of global commercial real estate firm Colliers International.
“Some of the managers that I’ve talked to haven’t voiced a particular concern yet, but they certainly are keeping their pulse on the climate,” he said. “People are astute enough to know that the president is somewhat limited. One person does not make the government of the U.S.”
Some Republican lawmakers in Washington expressed concerns about the impact that Trump’s policies could have on the country’s economy at last week’s meeting with the candidate on Capitol Hill. While some remained skeptical, the candidate seemed to convince them that he is devoted to free trade and would only renegotiate trade deals that would benefit the country.
“He did a really good job of talking through the concerns that some have about being protectionist,” said Sen. Tim Scott, R-S.C., after exiting Trump’s meeting last week with Republican senators. “He says he’s not and he’s looking forward to having a conversation about trade that is to the advantage of our country, which I think is a positive thing.”