International trade disputes inflamed by President Donald Trump's tough negotiating tactics are already impacting Oregon businesses.
Among other things, new and threatened tariffs against some of the state's largest trading partners have reduced grain and automotive exports through the Port of Portland, hurt nurseries and blueberry growers in the state, and are forcing Columbia Sportswear officials to decide whether to trim profits or increase prices on some of their clothing produced overseas.
And the fallout could get much worse if the disputes with China, Mexico and Canada are not settled soon because the economies of Oregon and the Portland region are so dependent on trade. China was the state's largest trade destination by value in 2018, accounting for more than 20% of shipments, according to the U.S. Census, thanks in large part to the computer components produced by Intel and other high-tech companies in Washington County.
"The headwinds of uncertainty are out there," says Port of Portland Chief Commercial Officer Keith Leavitt.
Those were some of the predictions made by experts and those in the business during a Portland Business Alliance breakfast forum on trade issues on Wednesday, June 19. It included the presentation of a new report on trade by ECONorthwest President John Tapogna and a panel discussion that featured Leavitt, Columbia Sportswear Global Trade Manager Emily Vedaa, Oregon Association of Nurseries Executive Director and CEO Jeff Stone, and Travel Oregon Vice President Teresa O'Neill. All said the state and region benefit from international trade arrangements that are now threatened by Trump's hard line positions, especially his tariff threats.
"This is something a lot of companies cannot bear," said Vedaa, noting that some of the clothing produced for Columbia Sportswear overseas is already subject to tariffs of up to 40%.
The 2019 State of Trade report was commissioned by the Value of Jobs Coalition, which includes the port, the alliance, and a number of other business associations. According to Tapogna, the region was dependent on trade well before white settlers arrived, with Native Americans using the ocean and rivers to move goods vast distances to trade among other tribes.
Today, the report said, international trade supports one-fifth of all jobs in Oregon, including 76,600 jobs in Portland. They also pay 11% more than average jobs in the state.
"Those involved in trade are constantly innovating, adding value to their products, and paying higher wages than other parts of the economy," said Tapogna. But at this time, the report said, global markets are experiencing structural and cyclical changes, causing a cooldown on trade that is being exacerbated the shifting policies of the Trump Administration. Such protectionist policies as tariffs, trade quotas, or other restrictions could potentially lead to:
-The loss of market access for products, which may cause job loss and some companies to close.
-Small companies serving supply-chain, trade logistics and transportation needs losing business.
-Consumers and families paying more for basic goods.
According to the report, Oregon's location along the Pacific Rim and its series of ports makes the state ideal for international trade. It is one of only 12 states in the nation that exports more than it imports, driven by Oregon's high-tech, manufacturing and agriculture sectors. A total of 505,700 jobs across the state are currently supported by international trade.
Exports to Oregon's 150 trading partners also have been increasing every year, led by the agriculture industry that includes cheese, wheat, blueberries, cherries, potatoes, grasses and hay.
"Oregon's agricultural sector is feeding the world. We trade 80% of our agricultural products outside of Oregon and 40% internationally," said the report.
The demand for services has also been increasing, Tapogna said, citing his own consulting firm as a local company now being retained by entities in other countries.
O'Neill noted that trade also includes tourism, with Portland being one of the top 10 cities in America visited by Chinese tourists, who spend an average of $6,000 during their trips.
But, the report warns, some of the state's largest trading partners have been targeted or threatened with sanctions by the Trump Administration, including China, Canada and Mexico.
"Trade related activity with Canada and Mexico — partners in the North American Free Trade Agreement (NAFTA) and potentially the U.S.-Mexico-Canada Agreement (USMCA) — supported 154,000 Oregon jobs in 2017," the report said.
Stone said the danger is especially real for nurseries which traffic in "live goods" that must be shipped to their final destinations quickly.
The warning is similar to concerns raised at the 2019 Portland-Vancouver region economic forecast presented by Portland State University Northwest Economic Research Center on Thursday, May 30. There, Ellen Zentner, the chief U.S. economist for Morgan Stanley, said continuing trade tensions with China could trigger a worldwide recession. She said the two countries must make progress resolving their differences by the G20 summit of leading industrialized countries scheduled for June 28-29 in Osaka, Japan.
The speakers all said the state and region will benefit if trade increases. Tapogna noted that the middle class consumers are increasing globally, creating more and more demand of goods and services from Oregon.
The breakfast forum ended with the moderator, Pacific Northwest International Trade Association Executive Director Maria Isabel Ellis, urging alliance directors to advocate for more trade. Her comments reflected the ECONorthwest report recommendations encouraging the federal government to maintain key trade treaties like NAFTA, approve new agreements that will expand trade more, and strengthen support for local, state and federal export assistance programs, helping small businesses enter the trade markets.
Ellis and the report also noted that local transportation infrastructure improvements are needed to reduce congestion and delays moving goods to market.
"Together, it's time to take action to protect the jobs, businesses,
and industries that keep Oregon competitive," the report says.
The Value of Jobs Coalition includes the Oregon Business County, Oregon Business and Industry, the Port of Portland, the Portland Business Alliance, and Greater Portland, Inc.
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