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“US state budgets will not be much affected in the near term by additional tariffs on US-China trade,” Fitch Ratings wrote in a recently published report entitled “US-China Tariffs Could Pressure Long-Term State Revenues.” Below are some key takeaways from the publication.

  • There could be some regional pressure if an industry that is heavily dependent on imported Chinese products is heavily concentrated in a particular business sector.
  • In the long run, the cumulative effect of increasing bilateral tariffs and/or a broader trade conflict could eventually lead to a combination of higher unemployment, lower income and lower state tax revenues.
  • There may be a long-term impact on the most exposed states if the US-China trade war escalates to a broader range of goods and services.