WTC Utah: U.S. trade war with China threatens Utah’s economy
World Trade Center Utah (WTC Utah) has released results of its analysis that shows if Chinese retaliatory tariffs on U.S. products are implemented, they will have diverse and harmful effects on Utah’s economy. In addition to threatening Utah’s direct and indirect exports, tariffs will put downward pressure on domestic and international commodity prices and limit expansion opportunities for Utah companies into emerging Chinese markets, the center said in a release last week.
“China is a large export market for Utah and retaliatory tariffs targeted to U.S. products will have a direct and negative impact on statewide industries and local companies,” said Derek Miller, president and CEO of WTC Utah. “Because tariffs are passed to consumers, the consequences of the retaliation will be felt across the state.”
In 2017, Utah exported nearly $850 million in value-added goods to China and Hong Kong, the report said. The specific Chinese tariffs threaten over $60 million — or about 7 percent — of those value-added exports and primarily affect four industries: aluminum recycling, ranchers and beef processing, plastics manufacturing and agriculture.
Data from the WTC Utah found:
• Over 40 percent of Utah’s aluminum exports went to China and Hong Kong in 2017. Chinese tariffs on aluminum waste and scrap threaten over $26 million, more than a third of Utah’s aluminum exports worldwide.
• Utah exported over $19 million in beef products to China and Hong Kong in 2017. Chinese tariffs threaten all Utah beef products exported to China, nearly 20 percent of Utah’s worldwide beef exports.
• Nearly 14 percent of Utah’s $162 million in plastics exports went to China and Hong Kong in 2017. Chinese tariffs threaten about $12 million, or 7 percent, of Utah’s worldwide plastics exports.
• Chinese tariffs threaten indirect exports of nearly $20 million in Utah’s pork products and $300,000 in fruit, as estimated by the Utah Department of Agriculture and Food.
The tariffs will also threaten the profitability of companies headquartered in Utah that export products from other states and countries to China and Hong Kong.
The report further found that a decrease in Chinese imports of U.S. products will increase domestic supply and thereby depress prices, thus threatening the profitability of Utah companies. For example, Utah’s wheat farmers are likely to see prices decrease domestically and internationally to compensate for the $350 million in U.S. wheat exports threatened by the tariffs. Utah’s transportation equipment sector could experience declining domestic demand for their products as tariffs impact U.S. automotive exports to China, valued at almost $12 billion in 2017.
New duties on passenger vehicles and smaller, single-aisle planes threaten U.S. automotive and aerospace manufacturers’ ability to penetrate emerging Chinese markets. Aerospace manufacturing is one of Utah’s largest export clusters and includes high-value suppliers of composites and other specialized materials for U.S. aerospace manufacturers. Tariffs imposed on U.S. manufacturers threaten their competitive position in one of the world’s fastest-growing air travel markets, thereby restricting opportunities for Utah companies that supply those manufacturers.