Washington State shippers in holding pattern as U.S.-China trade talks stall


Originally Published in Logistics Management

With the news of the postponement of the meeting between President Donald Trump and President Xi Jinping to sign an agreement to end their trade war, shippers may be able to buy a little more time to realign their supply chains. Any agreement that will ease tensions between the two countries, will be welcomed by the Washington Council on International Trade (WCIT). Indeed, the group recently released a new report that details the many industries and regions in Washington state that have a major stake in the outcome.  In virtually every county and congressional district, Washington workers and businesses rely on China as a market for their exports and as a supplier of products and raw materials. The study provides county-by-county and district-by-district analysis of Washington’s trade ties with China. Washington state is among the largest exporting states, especially to China. Washington accounts for 5% of U.S. goods exports to the world, and 14% of U.S. exports to China. Over the past five years, Washington state overall exports have dropped slightly, but exports to China have grown by 3% (in 2017 $). Controlling for oilseeds exports, which are only consolidated in Washington state, China’s tariffs affect roughly $2.7 billion of Washington state exports in 2017. Export products included in China’s tariff list supported an estimated 28,700 jobs in Washington in 2017. While a few industries, such as lumber and aerospace, have been relatively isolated from U.S.-China tariffs, the overall effect on Washington trade could be damaging. Iconic and important exports like apples, cherries and seafood have all been targeted. In addition, two of the products at the center of the conflict are soybeans and autos, which pass through Washington’s ports in large amounts and support various shipping and logistics jobs. As tariffs continue, exporters lose market share and importers are forced to make suboptimal sourcing decisions. “From cherry growers in the Yakima Valley to cargo handlers at the Port of Olympia, hundreds of employers in Washington state are anxious to see a successful resolution to the trade negotiations with China,” said WCIT President Lori Otto Punke. “The on-going trade dispute has presented a unique opportunity to encourage the Chinese to make much needed reforms in areas such as market access and intellectual property,” added Punke. “At the same time, high tariffs carry hefty costs for Washington consumers and businesses, so we hope an agreement is reached soon.” According to prominent trade analysts, however, such an agreement is still many weeks away, with further speculation that China will insist on a formal state visit rather than a simple understated trade deal signing.