Tariff Analysis is Crucial for States Economic and Fiscal Health

April 2nd, 2025, was declared Liberation Day by President Donald Trump. He announced widespread “discounted reciprocal tariffs” calculated by trade deficits between the United States and other nations. These tariffs are meant to protect American industries, promote domestic production, and lessen our dependence on other countries. Other nations potentially responding with reciprocal tariffs creates a complex situation where the winners and losers are unclear.

There have been a wide range of reactions to these tariffs. Fans of the tariffs believe they will raise revenue, bring production back to the United States, and ultimately result in other nations purchasing United States goods. Skeptics believe that tariffs will increase inflation nationally, businesses will not quickly return production to the United States, and that all of our trade partners will turn their backs on the United States and decide to trade with other nations.

States must realize that there will be winners and losers resulting from these tariffs, as each region will be affected significantly differently. Because of this, states must analyze their own region to forecast how they will be affected and how they can react.

Click here to view a webinar where we demonstrated how states can conduct tariff analysis for their region.

Wildfires in Los Angeles Underscore a Critical Need for Resilience Investment

Recent deadly wildfires in Los Angeles have once again highlighted the devastating impact of climate-driven natural disasters. With thousands of acres burned, hundreds of homes lost, entire communities displaced, and multiple lives lost, it is clear that there is too much to lose by not investing in resilience.

Quantitative resilience investment analysis is necessary for regions. Last year, the United States Chamber of Commerce released a paper titled “The Preparedness Payoff: The Economic Benefits of Investing in Climate Resilience.” The paper uses REMI PI+ to analyze the economic and fiscal benefits of investing in climate resilience. The authors found significant economic savings from prioritizing resilience investment.

The Economic Toll of Wildfires

Beyond the tragic impacts to communities resulting from wildfires, there are also significant economic impacts on the regions affected.  The price tag is immense, from immediate costs like firefighting and emergency response to long-term impacts such as property damage, infrastructure repair, and lost economic productivity. The Los Angeles region’s fires are projected to cost billions of dollars in recovery and rebuilding efforts, further straining local and state resources.

These economic losses are compounded by the personal toll on residents. Families face months or years of rebuilding, and businesses often struggle to recover or relocate. The cascading effects on employment, housing markets, and public services can ripple through the economy for years.

The Case for Proactive Investment

Events like these underscore the importance of resilience-focused investments. By allocating resources toward preventive measures, communities can mitigate the direct impacts of natural disasters and reduce recovery costs. Key areas for investment include:

• Wildfire Prevention and Management: Enhanced forest management, controlled burns, and updated firefighting technologies can reduce the spread and severity of wildfires.
• Infrastructure Upgrades: Fire-resistant building materials, underground power lines, and improved transportation networks can safeguard critical infrastructure.
• Community Preparedness: Education programs, early warning systems, and evacuation planning empower residents to act swiftly in emergencies.
• Climate Adaptation Projects: Addressing the root causes of increased wildfire activity through renewable energy adoption and emissions reductions can mitigate future risks.

 

A Call to Action

While recovery efforts are vital, they often come at a higher cost than proactive measures. Resilience investment saves lives, protects economies, and reduces the long-term fiscal burden on taxpayers. Policymakers and stakeholders must prioritize funding for resilience initiatives to safeguard communities like Los Angeles from the growing threat of climate-driven disasters.

2024 Economics Nobel Prize Winners

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Daron Acemoglu and Simon Johnson from Massachusetts Institute of Technology, and James Robinson from the University of Chicago.

The laureates began researching to solve the question: why are some nations rich and some are poor? In their research, they analyzed how institutions are crucial in deciding whether a nation has a framework conducive to economic growth.

When Europeans colonized areas around the globe, they instilled varying institutions. Some were purely extractive, where resources were harvested purely for the benefit of a select few. In others, economic and political systems were implemented that made more sustainable economic growth occur in regions that were once poor. While both methods were intended to benefit the colonizers, systems with certain institutions led to more long-term growth.

Examples of these institutions are laws that guarantee private property, instill democracy, limit corruption, and more. These inclusive institutions both grant citizens the chance of upward mobility and the incentive to try. This creates innovation, and at a mass scale, sustainable economic growth.

The laureate’s work is critical to understanding why inclusive institutions are important and help explain differences between countries’ wealth.

Later this year, we will be presenting a webinar analyzing Daron Acemoglu’s research on possible “automation taxes”, and how they work in comparison to income taxes. We will share more details about this presentation when they are ready to share.

Sources:

Press release. NobelPrize.org. Nobel Prize Outreach AB 2024. Mon. 4 Nov 2024. <https://www.nobelprize.org/prizes/economic-sciences/2024/press-release/>

Niemann, Daniel, et al. “Nobel Economics Prize Goes to 3 Economists Who Found That Freer Societies Are More Likely to Prosper.” AP News, AP News, 15 Oct. 2024, apnews.com/article/nobel-economics-prize-db3bfe55ac17dd22cf82f1dd637bfa94.

Stellantis Expansion in Belvidere, Illinois

Stellantis and the United Auto Workers have come to a tentative agreement to expand operations in Belvidere, Illinois. The agreement includes plans to invest $4.8 billion to reopen a distribution center closed in February and potentially develop a new battery and assembly plant. REMI analysis was run by Region 1 Planning Council to determine the potential direct and indirect economic effects of these investments in Boone County and surrounding counties.

Click here to learn more about economic impacts of this investment from Jason Holcomb, Director of Community Impact, at Region 1 Planning Council, in the article titled, “Study $5B from Stellantis could equal $3B for Belvidere area residents” written by Jeff Kolkey at Rockford Register Star.

Economic Impacts of Broadband Expansion in Indiana

Indiana has experienced a significant economic transformation through strategic investments in broadband infrastructure. In 2018, Indiana announced the Next Level Broadband Connections program, and in 2021 the state announced the Indiana Connectivity Program to expand broadband to households that previously had no access. Between 2019 and 2023, $609 million was invested in broadband infrastructure, drawing from federal, state, and private funds.  To demonstrate the profound impact of these investments on the state’s economy, the team at the Purdue Center for Regional Development used REMI PI+ and SEI to analyze key economic indicators including employment and GDP, in addition to thorough demographic analysis.

The economic benefits of these investments include an average of close to 1,600 new jobs per year, an increase of about 800 in population, and the addition of 580 workers to the labor force. This economic impact translates into nearly $195 million added to the state’s Gross Domestic Product (GDP) annually.

The analysis of workforce impacts reveals that broadband investments have significantly contributed to job creation. Younger workers (ages 16 to 24) constitute a higher share of the added labor force, contributing to economic rejuvenation. However, the study also indicates disparities in the distribution of benefits across demographic groups, with variations in educational attainment and compensation quintiles. Factors such as the percentage of the rural population and individual poverty rates provide an understanding of contextual nuances that influence the impact of investments.

In conclusion, the Purdue Center for Regional Development (PCRD) analysis underscores the transformative impact of the Next Level Broadband Connections and the Indiana Connectivity Program on Indiana’s economic landscape. The strategic allocation of funds has bolstered connectivity and driven job creation, population growth, and economic diversification across the state. As Indiana continues to invest in its digital infrastructure, the positive ripple effects are poised to shape the state’s economic future.

To access the full report released in 2023, “Impact of Next Level Broadband Connections and Indiana Connectivity Program Investments” by Roberto Gallardo, Director at the Purdue Center for Regional Development, please click here.