Transcription
Are red states getting exactly what they voted for? In many ways, yes. The policies they supported are now shaping their economies and their livelihoods. But my question is, did they fully understand what they were voting for?
According to a report from the US Bureau of Economic Analysis, Nebraska's gross domestic product fell more than 6% in the first quarter, tied with Iowa for the largest decrease in the nation. Farmers say President Trump's tariffs and the threat of tariffs have caused thousands of acres of tomatoes to go to waste because the cost to pack and pick them is more than what tomatoes are selling for this year. Well, here at five, trouble for Kucky's bourbon industry. Well-known brands in our state are reporting declines in bourbon sales. And distilleries tell us the challenges go beyond the tariffs. 39 states saw their GDP shrink in the first quarter of 2025 and most of the worst declines were in red states.
Now, state-by-state GDP is often delayed 2 to 3 months after the national GDP number is released. So, while these numbers are from the first quarter, we won't have the second quarter GDP for individual states until sometime in September. But what we know right now doesn't look great. Across much of the US, tariffs and trade wars are hitting the very industries that these states rely on most. And in the second quarter, national GDP swung back into positive territory, which was a big improvement from the first quarter. But if you think that growth means these red states are doing just fine, you're about to learn why that growth doesn't actually tell you what's going on here. Right now, it looks like there probably will be people that probably won't make it, quite frankly.
Now GDP is just a measure of everything produced inside a country. In the US, it's an average across all 50 states, which means big gains in a few industries or regions can hide deep losses elsewhere. And in Q2, when the US's GDP rose by 3%, that rebound wasn't driven by a surge in production. It was driven by a drop in imports. And here's why that matters. When we buy something overseas, it first gets counted in consumer spending. But since it wasn't made here, it's then subtracted back out of GDP. That subtraction is part of the GDP equation. So it avoids counting foreign-made goods as part of our own production. This is partially why the GDP was negative in the first quarter because so many companies tried to frontload goods to try to get ahead of the tariffs. But when imports then fall like they did in the second quarter, there's simply less being subtracted from the GDP math, which in turn can make the headline number look better, even if nothing on the ground in many states has actually improved.
So with that out of the way, let's talk about some of the very real issues these states are facing. Let's start with Nebraska. In the first quarter of 2025, its economy shrank by 6.1%. The steepest drop in the country alongside Iowa. And the biggest reason these two states saw declines was really no surprise. Agriculture. Nebraska and Iowa are both among the leading national producers of corn, soybeans, and wheat. Nebraska's farm rely heavily on exporting crops and livestock, especially to overseas markets. So when tariffs begin to disrupt global trade, Nebraska feels it almost immediately. Remember when countries like China and Canada retaliated with tariffs of their own after Trump enacted his high tariffs? Well, that hit agriculture especially hard because these industries depend on selling huge volumes abroad to stay profitable.
But here's the thing, this isn't a brand new problem. Nebraska and other Midwestern states have been tied to global commodity markets for decades, which means they've always been vulnerable to swings in prices, weather, and trade policy. But what's different now is the scale and persistence of this disruption. Tariffs obviously don't just raise costs for the US businesses and consumers. They also trigger retaliation from other countries, which we've already seen. And once countries that used to buy Nebraska's beef, pork, or soybeans find other suppliers, those markets can be incredibly hard to win back. Nebraska's representative Don Bacon, who is a Republican, said, quote, "We are now in a troubled time, and it's all about trade. It's all about getting corn and soybeans out the door." He went on to say in a separate interview that, quote, "What we're seeing is basically a recession economy in Nebraska and Iowa right now." So, while the trade war didn't create Nebraska's economic vulnerability, it comes at a time when things were already tough for farmers. And so, clearly, this is all just making it worse.
Now, I want to be clear. Blue states aren't immune to these policies. But in many ways, they tend to affect them less than red states. And that's because in many blue states, the economy is often driven by industries like tech, finance, and healthcare. What most refer to as the services sector. And these sectors still take a hit, but can adapt and diversify differently. However, in many red states, the economic foundation is built on agriculture, energy, and manufacturing, which are the very industries that tariffs are squeezing the hardest.
Still, the farmers I spoke with say economic uncertainty hasn't shaken their faith in the president. President Trump, this is what he ran on, you know, so it's no secret what he's doing. I'm I'm super supportive of fair and free trade. Um, and I think the end result is going to be good when we get done with the pro or with the process. I I I optimistic about what the result might be, but there's going to be some pain in the meantime. The dairy state exports nearly $4 billion in agricultural products each year. Two of Wisconsin's biggest farm exports are soybeans and dairy. Economists say those producers will suffer under tariffs from the Trump administration.
Now, also importantly to note, not every red state saw their GDP fall in the first quarter. Florida, Alabama, and Louisiana, for example, posted small gains, but those gains have very different drivers than the industries we're talking about in places like Nebraska, Iowa, or Kentucky. Florida's economy leans heavily on tourism, construction, and services, sectors that can grow even during trade disruptions, especially when population growth is fueling local demand. The bigger point is that states tied most directly to global commodity exports, especially in agriculture, are the ones feeling the sharpest pain from this trade war right now. Those sector-specific hits don't always show up the same way in every state's GDP. But the vulnerabilities are real and concentrated, and Kentucky is another perfect example. While their GDP decline in the first quarter was only 1%, recent reporting suggests things have only gotten worse since then. Bourbon isn't just a drink there. It's a multi-billion dollar export industry and a core part of the state's economic identity. 95% of America's bourbon is made in Kentucky, and it's shipped all over the world.
Now, tariffs have heavily impacted that trade, especially bourbon sales to Canada and the EU, which both countries slap retaliatory tariffs on American whiskey after the US raised tariffs on their goods. That's a direct hit to Kentucky because tariffs make bourbon more expensive overseas, which means fewer sales, less production, and eventually fewer jobs. And when those export relationships fade, they can once again become difficult to rebuild. The toasts not tariffs coalition, which is a group of 57 associations representing the entire three-tier chain of the US alcohol industry, sent a letter on August 6th warning Trump to remove tariffs on wine and spirits to the EU. They warned that the 15% tariff on EU wine and spirits could result in more than 25,000 American job losses and nearly $2 billion in lost sales. While this isn't exclusive to Kentucky, it obviously hits especially hard there.
But here's what makes Kentucky even more vulnerable. Its economy is deeply integrated into global trade, more than any other state. In fact, imports alone account for 32.3% of the state's GDP, and exports make up another 16.3%. That means nearly half of Kucky's economic activity directly depends on the movement of goods in and out of the state's borders. So when you couple that with bourbon facing retaliation tariffs and the state's footprint in automotive parts, pharmaceuticals, and aerospace, all tied to global supply chains, you get a state that's uniquely exposed to trade shocks. Both Republican senators from Kentucky have been critical of Trump's tariffs, but they haven't been able to convince many of their colleagues on the same side of the aisle to share that concern.
So, yes, in many ways, these states are getting exactly what they voted for. Policies that were sold as protection have delivered pain to the very industries they rely on most. And the longer this trade war drags on, the harder it's going to be to reverse the damage done. My only question is whether the people living through it will connect the dots and realize that what's hurting them isn't some abstract global force. It's the direct result of choices made at the ballot box.
If you enjoyed this video and you want to learn more about why Las Vegas is a warning for America, well, I covered it in this video here. Please be sure to check it out next. Thanks for watching.