Joshua Haiar/South Dakota Searchlight
Members of the Governor’s Council of Economic Advisors raised alarms during a virtual roundtable Tuesday about volatile Trump administration tariff policies, saying they’re driving up costs, stalling housing developments, and threatening key sectors of South Dakota’s economy.
“It’s a really regressive tax,” council member John Hemmingstad, of Avalon Capital Group, said of tariffs.
Hemmingstad said his team has paused multi-family housing investments due to the price uncertainty of building materials. He added that South Dakota, which relies heavily on sales taxes, could be especially vulnerable if higher tariffs cause inflation that dampens consumer spending.
Retailers are also feeling the strain. Kevin Nyberg, owner of Ace Hardware stores in Sioux Falls and Watertown, said suppliers are warning of price increases on up to 50% of inventory. He compared it to the economic disruption of the COVID-19 pandemic.
“This is the psyche of a retailer right now,” Nyberg said. “You scramble before the price increases go into effect.”
U.S. Senate Majority Leader John Thune, R-South Dakota, made a separate visit later Tuesday to Maguire, a water tower manufacturer and maintainer in Sioux Falls.
“When we hear from businesses locally, and we have, we’re obviously doing what we can to intervene with the administration,” Thune said. “On a broader level, the tariffs are, I think, designed to sort of rebalance trade, create more reciprocity with other countries who, in many cases, have been taking advantage of us.”
Last year, before Trump took office, Thune said an across-the-board tariff strategy would be “a recipe for increased inflation.”
At the Council of Economic Advisors meeting, South Dakota State University economics professor Evert Van der Sluis called the Trump administration’s approach a “deliberate policy to dismantle some of the pillars of American prosperity,” citing cuts to education, immigration and research as compounding the harm. He said economic modeling does not support the idea that tariffs will offset federal revenue losses or reinvigorate U.S. manufacturing.
Van der Sluis and others also expressed concern for South Dakota’s export-dependent agricultural sector, which remains vulnerable to international tariff retaliation.
“Agriculture is very much dependent on exports,” he said.
During Trump’s prior four years in office, the U.S. Department of Agriculture paid out billions of dollars to support farmers suffering from retaliatory tariffs. Thune said discussions are underway among Congress, the USDA and the White House about how to shield farmers from tariff fallout.
“I think you want to try and ensure that nobody gets harmed,” Thune said. “And agriculture oftentimes is the place where a lot of countries retaliate first.”
Hemmingstad said bailing out ag producers alone would be a tough sell politically.
“This time it’s not just ag. Every industry is going to be impacted,” he said. “Is ag really going to get one and no one else does?”
While farmers received significant aid during the last tariff standoff, Van der Sluis noted, “those bailouts, they come from federal revenue,” and so “it adds to the fiscal irresponsibility.”