Indiana is a trade and manufacturing powerhouse. Tariffs from Washington could do real damage.
When many people think of the powerhouses of American international trade, they might think of the busy ports in Southern California or the financial hub in Manhattan. They probably don’t think primarily of a state like Indiana, but international trade benefits the interior of the country too — and tinkering with it through tariffs could upset those heartland economies that Washington always likes to talk about uplifting.
Despite ranking 17th in population, Indiana ranks eighth among states in the value of its exports to the rest of the world. Its $55 billion in exports equal 11 percent of the state’s GDP. And 21 percent of Indiana’s workforce is employed in goods-producing jobs, the highest proportion of any state.
These facts are not lost on Todd Huston, the speaker of the Indiana house of representatives. “Everybody from one of the largest companies in the world, Eli Lilly, being based in Indiana, to being a huge manufacturing state across a large number of industries, to being one of the top ag states in the country — all those industries rely a lot on importing and exporting,” he told National Review. “So trade policy really matters to a state like ours.”
Pharmaceutical products are the top category of Indiana’s exports. Vehicles are second. Third is organic chemicals, exports of which have grown by 600 percent in nominal dollars since 2013. Fourth is industrial machinery, and fifth are surgical instruments. These are sophisticated products that Indiana supplies to the world, contrary to the caricature of international trade that says sophisticated manufacturing happens elsewhere while the U.S. exports soybeans and oil.
Indiana exports more than a billion dollars’ worth of goods to eleven countries. The top foreign destination for Indiana’s goods exports, by far, is Canada, which received almost double the value of second-place Mexico, according to 2024 data through the month of November. Surging into third place last year, surpassing China, was Italy, which began importing much larger amounts of chemicals from Indiana. A delegation of Indiana officials visited Italy late last year to further cultivate the trading relationship.
Indiana imports plenty, too, and the dollars residents use to buy stuff from abroad come back as foreign investment in the state. About 7 percent of the state’s private-sector jobs, and about 22 percent of the state’s manufacturing jobs, are from companies headquartered in other countries. Companies from Japan, France, and the U.K. are the top foreign investors in Indiana.
“We think this is an opportunity for a really pro-growth time in our state,” Huston told NR. Indiana had the seventh-highest net migration of any state in 2023, gaining 32,000 new residents. But the prospect of tariffs has hurt Indiana’s state revenue forecasts, which could hinder pro-growth policies such as scheduled income tax cuts. The cuts were subject to revenue triggers when they were first passed in 2022, but the legislature removed those triggers in 2023, meaning the cuts are set to take place regardless of actual revenues.
That might have seemed like an okay idea in 2023, before the threat of major tariffs came with the election of Donald Trump in 2024. The economic forecast from December 2024 that Indiana uses to project its revenue through fiscal year 2027 assumes that a 10 percent universal tariff and a 30 percent tariff on China are put in place. “We expect many trading partners to respond with tariffs of their own on US exports,” the forecast says, which would hammer Indiana’s especially export-heavy economy. While revenue growth for next fiscal year is still decent at 3.3 percent, revenue the year after is now projected to grow at only 0.3 percent.
“There’s a lot of excitement about the Trump administration and their pro-growth policies,” Huston said. “What I’m hearing is people are anxious to see where this all lands.”
One group that is anxious is Indiana farmers. “There’s just too much unknown, and that creates a lot of market volatility, and it makes it really difficult to guess what’s going to happen,” Greg Kneubuhler, owner of a crop consulting firm based in Harlan, Ind., told Fort Wayne’s ABC affiliate earlier this month. When the first Trump administration imposed tariffs on China, it bailed out U.S. farmers harmed by retaliatory tariffs with billions of taxpayer dollars, supersizing the Department of Agriculture’s budget.
“We’re watching closely the president’s trade policies. We’re confident that he will get to the right space and is using this for leverage in negotiation,” Huston, a Republican, told NR. The GOP holds a 70–30 majority in the chamber that he leads. “We support the president in better trade policies, and just making sure that those trade policies support states like ours.”