DataWatch: Trump’s tariffs and Wisconsin’s economy

President Donald Trump’s fluctuating tariff policies have kept the world guessing.
Uncertainty about what’s next — and how U.S. companies will absorb new costs — has stirred anxiety among investors, business owners and consumers.
“That whipsawing back and forth, that creates a tremendous amount of uncertainty,” said Steven Deller, a University of Wisconsin-Madison professor who researches the state’s agricultural and manufacturing economy. “And one thing that the economy hates is uncertainty.”
What does it all mean for Wisconsin? Fast-shifting policies make that difficult to definitely say. But Wisconsin Watch spoke with experts and examined economic numbers to provide some context.
First, what are tariffs and why is Trump issuing them?
Tariffs are a federal tax American importers pay when goods arrive from other countries.
The U.S. previously forged free trade agreements with 20 countries that limited tariffs in trade. Trump’s tariffs have blown up the status quo and prompted retaliation that has harmed some domestic producers and further rattled the global economy.
The Trump administration has cited several justifications for his policies, some of them conflicting. It says tariffs will boost manufacturing by encouraging Americans to buy domestic goods, reduce U.S. trade deficits and pressure countries to cut deals on other issues — like curbing the fentanyl trade and illegal immigration.
To what do Trump’s tariffs apply?
First Trump added “national emergency” tariffs ranging from 10% to 25% on imports from China, Canada and Mexico. After adjusting those tariffs several times, he announced on April 2 a baseline 10% tariff on goods from all countries that export to the U.S., along with higher “reciprocal” tariffs on countries with which the U.S. has trade deficits — a move that set the stock market plunging. Trump paused most reciprocal tariffs days later.
As it stands, most Chinese imports face tariffs of 145%, while Canada and Mexico face 25% tariffs, along with 10% for most everyone else.
Trump has exempted some goods from reciprocal tariffs, including copper, pharmaceuticals, lumber and electronics such as smartphones and laptops. However, Trump administration investigations of the national security and economic effects of importing items he exempted could result in additional tariffs. The White House has placed a 25% tariff on steel and aluminum imports.
How is this playing in Wisconsin?
Wisconsin’s large manufacturing and agricultural sectors make its economy strong, said Missy Hughes, secretary and CEO of the Wisconsin Economic Development Corp. But business leaders she works with are increasingly hesitating to make big investments.
“It’s frustrating because our businesses were doing really well, and the Wisconsin economy is strong and has been strong for the last two years,” she said.
How much does Wisconsin import?
Wisconsin imported more than $38 billion in goods last year, about half from countries facing the highest Trump tariffs: China, Canada and Mexico.
Machinery and electronic products made up about one-third of Wisconsin’s total import value last year. Pharmaceutical products, some of which Trump has since spared from tariffs, made up 12%.
Who bears the cost of tariffs?
Importers pay tariffs to Customs and Border Protection when goods enter the country. The companies may absorb those costs or pass them to consumers by hiking prices — a common scenario.
Deller calls tariffs a regressive tax because they most affect people with lower income.
“They tend to spend their money more on goods than services,” he said. “They’re more likely to shop at a Walmart or a Dollar General-type store, and a lot of the goods that are sold in those kinds of stores come from international markets.”
How might tariffs affect Wisconsin manufacturers?
“U.S tariffs might benefit domestic manufacturers if they serve as a negotiating tool to encourage other countries to lower their own tariffs or other barriers to trade,” according to a recent Wisconsin Policy Forum report. “They might also insulate Wisconsin manufacturers from international competition at home.”
But they can harm Wisconsin producers by raising prices on raw materials or components that they import, such as steel or aluminum, the report added. Additionally, Trump’s tariffs have prompted retaliation that makes U.S. exports more expensive — at the risk of prompting foreign companies to drop Wisconsin suppliers.
Wisconsin’s top exports are particularly vulnerable to retaliatory tariffs: industrial and electrical machinery, accounting for $10.9 billion or nearly 40% of state exports in 2024, according to the Wisconsin Policy Forum.
A New York Times analysis shows that Wisconsin workers may be among those hit hardest by retaliatory tariffs because affected industries support so many jobs in the state.
“Economists don’t agree on anything except for tariffs. You put a hundred economists in the room, and you ask them are tariffs a good policy — and 99 of them are going to tell you, no,” Deller said. “This is bad policy. At least the way that Trump is doing it. Everybody loses.”

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DataWatch: Trump’s tariffs and Wisconsin’s economy is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.