Trump’s Trade War Crushing California’s Economy
Among all U.S. states, California is suffering the most from Trump's trade war against China that started a year ago. The richest state in the United States -- and the fifth richest "country" in the world - California is also the top American exporter and the top importer of goods to and from China.
Trump's newest tariffs (25 percent on $500 billion worth of Chinese goods) to take effect in July will magnify the pain currently being experienced by the state and its $2.7 trillion economies. No other state does more trade with China than California.
In terms of absolute volume, California transacts more trade with China than any other state in the Union. Total trade with China exceeded $175 billion in 2018 but trade in 2019 is slowing down. The effects of the trade slowdown are being reflected in California's once robust economy.
California's economy grew by 3.5 percent in 2018 but decelerated to some 2 percent in the first quarter of 2019, said the U.S. Department of Commerce. A major reason is Trump's trade war.
California's exports to China for the first four months of 2019 fell 13 percent after plummeting by 25 percent in 2018. Computers and electronic components comprised nearly 26 percent of the state's exports to China, said the California Chamber of Commerce.
California exported more than $16.3 billion worth of goods to mainland China in 2018, according to the U.S. Census Bureau. California is the biggest U.S. importer of goods from China. It imported $161.2 billion in merchandise in 2018 and $39 billion in the first four months of 2019.
California agricultural exports to China rose despite Trump's tariffs, but only by 5 percent. But this tiny boost might also have been caused by "frontloading" and is thus temporary. Once frontloading ends, export volumes will fall.
John Driscoll, Maritime Director at the Port of Oakland in California, believes some exporters are still frontloading or trying to ship to China ahead of the steeper tariffs in July.
"We're a little bit skeptical to know what's going to happen in the future because we've seen a lot of frontloading," said Driscoll.
"So the unknown and the uncertainty is if this continues and tariffs impact these volumes in the future, we could see some falling off of our volumes."
Agriculture, electronics, industrial processes represent the largest percentage of U.S. exports and are at most risk from Trump's China's tariffs," said Erin Ennis, senior vice president of the U.S.-China Business Council that represents 200 U.S. companies doing business in China.
"For about the last 15 years, China has been the fastest-growing export market for American companies," said Ennis.
Enniss said Illinois, which exports agricultural products and chemicals to China, was especially hard hit in 2018. Also badly pummeled were Louisiana and Texas, the largest exporter of electronics to China.
She said other top exporting states to China include Texas, which exported $16.6 billion in goods to China in 20918; Washington ($15.9 billion); South Carolina a($5.6 billion) and Oregon at $4.7 billion.
Behind California, the top importers of Chinese goods are Texas ($44.5 billion); Illinois ($40.9 billion); Tennessee ($26.6 billion) and Georgia at $23.8 billion.