How Trump’s tariffs could affect Oklahoma’s economy

Listen to this article

President Donald Trump’s steep new tariffs on virtually all U.S. trading partners are stoking fears of rising prices for consumers and deepening trade wars.

Oklahomans are waiting to see how the increasing costs of imports and exports will affect them.

“While it’s too early to determine how new federal policies will directly affect the state, our message to companies is that Oklahoma is the perfect partner during times of uncertainty and the Department of Commerce is here to help businesses navigate any situation they may face,” Evan Brown said in a statement.

“Oklahoma ranks second in the nation for lowest cost of doing business, and companies currently operating in Oklahoma know how committed we are to cutting red tape and making Oklahoma as business-friendly as possible,” said Brown, executive director of the Oklahoma Office of Economic Development, Growth, and Expansion.

Companies around the world have shown interest in foreign direct investment partnerships with Oklahoma, Brown said. “We are having those conversations to be creative and take advantage of these emerging opportunities.”

On Wednesday, Trump announced his long-promised “reciprocal” tariffs, declaring a 10% baseline tax on imports from all countries and higher tariff rates for dozens of nations that run trade surpluses with the U.S.

Among those steeper levies are a 34% tax on imports from China, a 20% tax on imports from the European Union, 25% on South Korea, 24% on Japan and 32% on Taiwan.

The action could mean many Americans will find essentials such as housing, autos and clothing more costly.

Prime Minister Mark Carney said Thursday that Canada will match Trump’s 25% auto tariffs – which took effect Thursday – with a tariff on vehicles imported from the United States.

Trump previously placed 25% tariffs on Canada’s steel and aluminum. And Carney said Canada can expects further tariffs on pharmaceuticals, lumber and semi-conductors.

Economist Rodney Holcomb expects certain countries will immediately request negotiations to minimize the impact the tariffs will have on their trade.

“As we’ve already seen this year, deals can be quickly made to exempt or delay tariffs,” said Holcomb, Oklahoma State University Extension specialist in food economics.

“It’s not a matter of whether tariffs are good or bad. In general, they’re bad because they’re a tax,” he said. “But they’re also a negotiation tactic. It’s more a question of who’ll blink first.”

Canada is Oklahoma’s largest trade partner. Nearly half of all imports coming into the state are from Canada and 27.8% of all exports go there, according to 2023 data from the Oklahoma Department of Commerce.

The report shows Oklahoma exports increased by 4.4% from 2021 to 2023. Top exports counties after Canada are Mexico with 9.7% of total exports and Germany with 9.1%. Together, the top three countries received 47.4% of all Oklahoma exports, totaling more than $3 billion.

The top export category is nuclear reactors, industrial machinery and parts, 29.7% of all exports for $1.9 billion, followed by aircraft, spacecraft and parts, 13.2% for $862 million.

Oklahoma ranks 12th in the nation for receiving imports from Canada, totaling more than $9 billion. Other top import partners are China ($2.5 billion) and Mexico (more than $1 billion.)

The top import commodity category in 2023 was mineral fuel, oil, bitumen substances and mineral wax at $7.2 billion. It represented more than 40% of all imports.

Oklahoma is home to more than 430 foreign-owned companies that support thousands of jobs in the state. Companies that make their products in the U.S., using all U.S. parts, and sell them in the U.S. are not affected by tariffs.

The 2023 report shows Canada has the most business establishments in Oklahoma at 79, followed by Japan and the United Kingdom with 66 each. Countries with the most employees in Oklahoma were Mexico, 6,801; Ireland, 6,283; France, 5,914; and Germany, 5,712.

The Associated Press contributed to this article.