Tariffs and threats of tariffs drove a week of dramatic price swings on global financial markets. But how are these developments likely to affect the people of Hawaiʻi? And what can we look at as signs for what may happen next?
Here are 5 takeaways as we close out the work week:
1. Trade deficits don't tell the ENTIRE trade story
It's not as simple as it used to be to answer the question “Where is this product made?” One great example is Hawaiʻi's favorite vehicle: the Toyota Tacoma. This truck has been the best-selling vehicle in the state for nearly 25 years.
The Tacoma is assembled in Mexico, but components from steering columns to catalytic converters are made in Long Beach, California. The engines on the hybrid model are manufactured in Huntsville, Alabama.
So a tariff on the Tacoma will likely match whatever final tariff is assigned to products made in Mexico, which would boost its price to consumers. But if that price increase slows demand for the model, it could impact some jobs in the United States.
2. COMPANIES make investments, not governments
Less than three weeks ago, the executive chair of Hyundai Motor Group was at the White House for an announcement about the South Korean company's U.S. manufacturing plans, which include a $5.8 billion investment to build its first steel plant in the United States. President Donald Trump insisted “This investment is a clear demonstration that tariffs very strongly work.”
But the decision about this plant was not made in recent weeks or months. Companies generally make expansion plans years in advance, considering a variety of factors, including building out supply chains closer to major markets.
3. The economics of trade include INVESTMENT
This is part of a long tradition of “transplant factories” of multinational companies based overseas, starting when production began at Honda's plant in Marysville, Ohio, in 1982. Today, Asian and European factories are common throughout the United States. It's one factor that has made Japan the top foreign investor in the United States for the past five years.
But the head of the Japan External Trade Organization (JETRO) recently told Bloomberg that higher tariffs could actually lead to decreased U.S. investment by Japanese firms because the cost of doing business would likely rise — adding uncertainty to corporate planning.
4. This is less about the economics of trade and more about the POLITICS of trade
And that includes what many foreign leaders have understood for some time: a successful approach to current U.S. policy includes a bit of flattery of Trump. At that White House meeting on March 24, Euisun Chung, the executive chair of the Hyundai Motor Group, thanked Trump for “giving me this opportunity to speak here today” and congratulated him on “the remarkable start to your new term,” to which the president replied, “It's been good!” Chung also gave the president credit for early discussions about a recently opened auto plant in Georgia, although it was originally designed to produce only electric vehicles.
5. Looking for a nonpartisan off-ramp
It used to be that issues of international trade and investment were not split along party lines. Even now, there is considerable agreement among lawmakers of both major parties that there are long-term structural issues to be addressed in this area. But increasing signals from financial markets to consumers who also vote indicate a growing concern about the potential impact of tariffs, and more specifically the uncertainty of changing tariff threats.
This story aired on The Conversation on April 11, 2025. The Conversation airs weekdays at 11 a.m.
