Washington’s economy relies heavily on trade, with about 40 percent of the state’s jobs tied to international exports.
As the Trump administration forges ahead with trade policy, billions of dollars are at stake for Washington’s growers and manufacturers, speakers said Tuesday at the Association of Washington Business’s spring meeting in Spokane.
The looming renegotiation of NAFTA, pending tariffs on U.S. steel and aluminum imports and a potential trade spat with China could roil the state’s economy.
“People think this is all about urban areas. It’s not,” said Kris Johnson, AWB’s president and chief executive. “(International trade) is in every corner of the state.”
Washington exports about $80 billion in goods annually – from airplanes and forklifts to wheat, apples, hay and other agricultural products, electronics, aluminum plates and machinery.
About 11,000 Washington exporters are small- to medium-sized companies, according to the International Trade Association. China is the state’s top export market, followed by Canada.
Renegotiation of the North American Free Trade Agreement is expected to set the tone for future U.S. trade deals, speakers said.
About 14 million U.S. jobs depend on trade with Canada and Mexico, said John Murphy, the U.S. Chamber of Commerce’s senior vice president of international policy, who gave AWB’s keynote address Tuesday.
NAFTA has been “a bonanza for American farmers,” he said, with the exception of sales of U.S. dairy products to Canada, which face stiff tariffs.
“Canada’s dairy market is largely closed to U.S. exports,” Murphy said. “We’d like another shot.”
The 24-year-old trade agreement also should be redrawn to address the rise of digital commerce and intellectual property, which weren’t part of the original agreement, he said.
The Trump administration, however, has taken some unorthodox approaches to trade, with a focus on U.S. sovereignty and an “I win, you lose” attitude, Murphy said. “Trade agreements have to be mutually beneficial, or why would a country enter into one?” he said.
Murphy also said U.S. Commerce Secretary Wilbur Ross’s push to add a five-year sunset provision to NAFTA is unusual. Ross has said the sunset clause would create regular reviews of NAFTA, but most businesses want a longer agreement.
“Companies need certainty they will have access to customers in Mexico and California to make long-term investments,” Murphy said.
In addition, Trump’s policy on steel and aluminum imports, including products from Canada and Mexico, continues to create uncertainty. The administration recently announced a delay in implementing the tariffs, which were unveiled in March as a way to protect domestic producers.
The announcement of the tariffs has led to price volatility and panic buying of steel and aluminum, Murphy said. “It’s been a difficult time for a lot of manufacturers.”
While the tariffs are projected to create about 26,000 new jobs in domestic steel and aluminum production, they could result in a net loss of about 495,000 U.S. jobs, Murphy said. The issue is complicated for the U.S. Chamber, which represents companies on both sides of the issue, he added.
Overall, NAFTA has been good for Washington, whose economy ranks No. 1 on a per capita basis for trade, Johnson said. Since NAFTA went into effect, state exports to Canada have risen 200 percent and exports to Mexico have risen 700 percent, he said.
“We need trade policies that are win-win-win creations,” Johnson said. “It should work for Canada, the U.S. and for Mexico.”
If the U.S. pursues protectionist trade policies, it risks falling behind economically as other countries seek out free markets, said Murphy, who cited the Trans-Pacific Partnership as an example. President Donald Trump pulled out of the massive Pacific Rim trade deal, which was largely a U.S. brokered agreement.
“What you see is all these countries moving forward with new trade agreements among themselves,” Murphy said.