The Trump administration’s whipsaw threats of tariffs with major trading partners such as Canada and Mexico have created a new level of global economic uncertainty, according to a UNLV economics professor, while a new study shows that Nevada could be one of the least hardest hit states by tariffs.
Ian McDonough, an associate professor and chair of the economics department at UNLV, said there are a number of schools of thought regarding Donald Trump’s tariffs under the International Emergency Economic Powers Act, with the main one being they are the start of an economic endgame.
“One of them is that free trade is better than no free trade, and this is one way to actually lower trade barriers in the long run,” he said. “So there are people arguing that Trump’s tactic here is actually, if we are patient, to reduce tariffs across the board, and that is one school of thought. And my response to that is how much damage are we doing to get there, because where I’m at, the one thing I know for certain is everything is uncertain right now.”
How hard could Nevada get hit?
Nevada will actually be one of the least impacted states economically from potential tariffs, according to a new study from Trade Partnership Worldwide. However, costs will still likely rise across the board for goods and services.
According to the study, the state could see a 200 percent increase regarding import prices from potential tariffs related to current market rates, which equates to $1.4 billion of increased costs for the state’s economy, ranking Nevada 33rd in the country.
Also, in terms of potential growth rate regarding tariffs paid, Nevada ranks 46th in the country, the study says.
The two hardest hit states by tariffs in terms of percentage increase are Montana and North Dakota. In terms of overall dollar value, the two top states are Texas and California.
Dan Anthony, president of Trade Partnership Worldwide and one of the authors of the study, said Nevada is fairly insulated from the country’s two main trading partners to the north and the south.
“I was curious as to why Nevada ranked so low and looked into the underlying data,” he said in an email response to the Las Vegas Review-Journal. “The short answer: Nevada is just one of three states (along with Hawaii and New Jersey) where neither Canada nor Mexico ranks among the top three import sources. For that same reason, imports into Nevada faced a higher average tariff (3.9 percent) than any other state in 2024.”
McDonough said although Nevada relies heavily on its gaming and tourism sector, which does not have to import as much as more traditional industries such as energy and manufacturing, locals could still feel the effects if Americans are forced to cut discretionary spending such as vacations and travel.
“On the import side I think the hospitality sector will feel it because a lot of that is restaurants and a lot of food services are going to feel that pinch in respect to higher food costs. But also the second order effects, such as states like Texas and California, if these effects are passed on to their consumers, I can’t imagine that somehow does not bleed through to Nevada given lower demand for hospitality services, do we then suddenly have less people visiting Nevada because their wallets are stretched even further?”
McDonough pointed to the Federal Reserve Bank of St. Louis’ Economic Policy Uncertainty Index hitting levels similar to the start of the COVID-19 pandemic that show average Americans are not feeling good about Trump’s tariffs right now.
“The people who are most always the hardest hit from economic uncertainty are in the lowest income bracket,” he added.
Retaliatory tariffs from nations such as Canada, the U.S.’s main trading partner, also pokes holes in the idea of hardball negotiation tactics that Trump seems to favor, added McDonough.
“This is what I tell my students, even if the aim is to negotiate and you are using tariffs as a negotiating tool, you have a real problem if people call your bluff because now you actually have to follow through with what you said you would do, and that is what is tipping us closer to a trade war and on top of that the uncertainty it creates it absolutely bananas,” he said.
Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.
