South Dakota Businesses Feel Pain as Trump Tariffs Raise Prices

The economic landscape in South Dakota is facing a turbulent period, with Governor Kristi Noem's advisors expressing deep concern over the impact of President Trump's tariff policy. John Hemmingstad, a council member from Avalon Capital Group, characterized tariffs as a "really regressive tax," highlighting the significant strain they are placing on various sectors of the state's economy.

Hemmingstad revealed that his team has been forced to pause multi-family housing investments due to the pervasive uncertainty surrounding the prices of building materials. He underscored that South Dakota, which heavily relies on sales taxes, could be particularly vulnerable if higher tariffs fuel inflation and consequently dampen consumer spending. This vulnerability stems from the interconnected nature of the state's economy with national trends.

Ripple Effects Across Industries

The repercussions of these tariffs are not confined to the construction sector. Retailers are also experiencing firsthand the mounting pressure, as suppliers warn of imminent price increases on up to 50% of their inventory. Kevin Nyberg, owner of Ace Hardware stores in Sioux Falls and Watertown, drew a parallel between the current economic climate and the disruptions caused by the COVID-19 pandemic. He described the prevailing sentiment among retailers as one of constant scramble to adapt before the price hikes take effect.

A Political Tightrope

Senator John Thune, South Dakota's Republican representative in the U.S. Senate, acknowledged the concerns raised by local businesses during a visit to Maguire, a water tower manufacturer and maintainer in Sioux Falls. He emphasized that efforts are underway to intervene with the administration to mitigate the negative impacts of these tariffs. While acknowledging the intent behind the tariffs—to rebalance trade and foster reciprocity with other nations—Thune expressed reservations about their potential consequences.

In a previous statement, Thune had warned that an across-the-board tariff strategy would likely lead to increased inflation. His stance reflects the delicate political balance between supporting domestic industries and safeguarding against the broader economic ramifications of protectionist measures. The political impact of these tariffs is a complex issue with no easy solutions.

Fiscal Irresponsibility and Long-Term Concerns

Economists, such as Evert Van der Sluis from South Dakota State University, have been vocal in their criticism of the Trump administration's approach to trade policy. They argue that the reliance on tariffs constitutes a "deliberate policy to dismantle some of the pillars of American prosperity." Van der Sluis pointed to cuts in education, immigration, and research as compounding factors that exacerbate the harm caused by these tariffs.

He further emphasized that economic modeling does not support the notion that tariffs will effectively offset federal revenue losses or revitalize U.S. manufacturing. Concerns have also been raised about the potential for retaliatory tariffs from other nations, particularly in light of South Dakota's export-dependent agricultural sector. Van der Sluis highlighted the vulnerability of agriculture to international trade disputes, noting the significant impact that previous tariff standoffs have had on farmers.

While acknowledging the need to protect farmers from the fallout of these trade wars, Hemmingstad cautioned against bailing out only one industry while others suffer. He questioned the political feasibility of providing targeted relief to agriculture when the entire economy is facing widespread disruption. The **fiscal irresponsibility** of continuous bailouts, as pointed out by Van der Sluis, adds another layer of complexity to this already multifaceted issue.