Raising taxes on imports could pose a major problem for retail and agriculture if the Trump administration's push for fair trade causes other countries to retaliate against the United States, Republican Gov. Asa Hutchinson told CNBC on Friday.
"I'm concerned about it," Hutchinson said about the tax, the details of which Trump is reportedly discussing with House Republicans.
"I understand the need to rebuild manufacturing in the United States, to have a tougher trade policy, but we cannot jeopardize our place in the global marketplace," the Arkansas governor told "Squawk Box."
Not only would an effective tariff raise costs on goods coming into the country, but those costs would trickle down to consumers, who would see prices rise on the shelves of big retailers like Arkansas-based Wal-Mart, which import most of their products, Hutchinson said.
Hutchinson said he is also concerned about the backlash it would invite from the United States' global trading partners.
"In a state like Arkansas, not only do we have Wal-Mart, ... but also we have agriculture, and if you have other countries retaliating against the United States, it's going to cost us in our agricultural exports, and that retaliation is something we'd be very concerned about," he said.
The governor was less worried about the effect of another part of President-elect Donald Trump's agenda, his mission to dismantle Obamacare, or the Affordable Care Act, and replace it with a better plan.
"We are prepared," the governor said, emphasizing his state's readiness to transition to a more favorable health care system.
But agriculture and trade remain a top concern for the governor and former congressman as he looks ahead to Trump's first 100 days.
"Arkansas [is] dependent upon the global marketplace," he said. "We don't want to diminish that."