Economic expert breaks down the impact of Trump’s tariffs on Arkansas economy

LITTLE ROCK, Ark. — President Donald Trump’s 25% tariffs on steel and aluminum are now in effect.

“It’s not the first time we’ve had tariffs on steel, going back to even back in the 1980s, George W. Bush put tariffs on steel in the early 2000s,” UA Little Rock Economic professor Michael Pakko said.

Conversations have started again since President Trump’s office announced its plans to implement a 25% tariff on all steel and aluminum imports.

Tariffs have been a hot topic, but those like Pakko want you to understand their effects on the economy here in the natural state.

“We would expect that these tariffs will positively impact steel producers, and that includes those that are here in Arkansas,” Pakko said. “It also means that there are going to be higher costs to consumers, and difficulties with manufacturers who use inputs of steel and aluminum into their production process.”

Lexicon Inc. CEO Patrick Schueck told THV11 that there’s another side to note.

“[It] could potentially affect what we do, which is fabrication of structural steel,” Schueck said.

Fabrication is the process of steel production. It’s something Lexicon Inc. utilizes for their day-to-day operations.

“It’s taken from scrap metal and turned into I-beams made in the United States,” Schueck said. “We weld all the parts on it so that we can go build these huge structures for Amazon, or for the Dallas Cowboys, or for power plants.”

A report from U.S. Steel showed the industry generates an economic impact of $383 million in Arkansas.

Mississippi County was named one of the largest steel-producing counties in the nation — positively impacting companies like Lexicon but effecting exporters such as Canada.

Pakko explained how this process could hypothetically work.

“If everything goes into effect, Canada, for instance, would experience the 25% tariff on steel and the 25% on Canadian goods for a total of 50% tariff. That would pretty much make Canadian steel unaffordable here in the United States,” Pakko said.

In turn, Pakko said this will boost domestic steel production in the United States.

The impact for those at home will all come down to the cost — affecting everyday items such as cars, home appliances and more.

“It also is likely to increase prices regardless. You can think about the tariff as creating now two kinds of steel. There is imported steel that includes the tariff, and there’s domestically produced steel that doesn’t,” Pakko said.

CBS News reported that international companies have announced plans to move operations to the United States.

This comes after President Trump’s announcement to “impose tariffs on companies that do not shift manufacturing jobs to the U.S. from overseas.”