Local, national economy experts give their take on emerging trade war
Despite the pause on tariffs that helped markets and optimism recover on April 9, the impact that could be felt from them here in the tri-county region, including Santa Barbara, once the 90 days are up, is still lingering.
That is what economic experts shared about the looming trade war during the 2025 Santa Barbara County Economic Summit on May 12 at the Granada Theater in Santa Barbara.
Put on by the UC Santa Barbara Economic Forecast Project, Peter Rupert, the director of the program, highlighted the various companies based here in the area that would be affected by the tariffs.
He did so through his wardrobe. Rupert sported a watch band from Nomad, a Santa Barbara-based company. Everything they make, from bands to cases, comes from China.
“Do they have plans to move out of China? They do, but it comes at a cost,” Rupert said.
He then pointed to his jeans, which were purchased at Ace Rivington, a shop on State Street. Even though it is a local business that uses California cotton, the cotton is shipped to Italy to make the denim, and then shipped to Mexico to make the jeans. All those countries could have steep tariffs placed on them as well.
Finally, he pointed to his Hoka’s, which are produced by Goleta-based Deckers. A lot of their work is now produced in Vietnam.
“I think if we personalize it, we realize, ‘Hey, these are businesses we love here. We love them to be here. We want them to succeed,'” Rupert said.
“These are very, very competitive markets.”
Tariffs were the major focus of the May 12 showcase.
George Alessandria, a Professor of Economics at the University of Rochester and NBER Research Associate, spoke at length about the history of tariffs, when they were used in the United States and the difference in tariffs between President Trump’s first and second terms.
Alessandria said that in 2018, during the first wave of modern tariffs, many companies did not look for new suppliers and trade did not fall off as much as people expected.
“Only when Biden came into office and didn’t lower those tariffs back to where they were reported, people realized, oh no, these are kind of here to stay for a while,” he said.
Overall, his sentiment was that “we’ve been through this before and the economy has survived just fine.”
Former Federal Reserve CEO Jim Bullard also spoke about the economy, noting that coming into this year, the economy was looking very strong.
“But the threat and tariffs were definitely higher than expected. We’ve got this game theory going on between the rest of the world and the U.S. and bilaterally, between all these countries. It’s not clear how that’s going to play out,” Bullard said.
Lee Ohanian, an economics professor at UCLA and senior fellow at Stanford University, spoke about housing in California.
He noted how the rising costs of building in California is what is forcing such a housing crisis. He said that the median home price in California is now $884,000, which is 115% higher than the national average, and only 16% of California households can afford it, according to the California Association of Realtors.
In Santa Barbara, the median price for a home is $1.4 million.
This is also the most lopsided California housing prices and the national average has ever been.
“Housing costs essentially mirror the cost of building,” Ohanian said.
He argued that too many regulations lead to delays in building and thus drive up the cost. He gave the example of a development called New Holland Ranch in 1994, which aimed to be a new city for 60,000 people.
“It took 27 years to build the first homes because there was a series of regulatory barriers and environmental lawsuits that developers had to deal with,” he said.
“These homes also now sell for as high as $2.8 million.”
Ohanian also talked about homelessness and despite the state investing $37 billion into housing programs since 2019, the number of homeless people in the state has continued to climb.
He argues that there needs to be more transparency in where that money is going, there needs to be a bigger emphasis on helping reunite homeless people with family and other assets that will make them less dependent on the government in the future and to better teach our K-12 students about the issue.
Finally, Rupert, in addition to his talk on tariffs, discussed how Santa Barbara County’s weak employment rate does not seem to be even hitting pre-Covid levels in 2025.
He noted that retail, leisure and hospitality employment is also falling in Santa Barbara, and at a far faster rate than the rest of the country.
“We’ve seen very slow growth, actually, in employment. It’s something we should be worried about,” Rupert said.
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