SALT LAKE CITY — As the Trump administration continues a tariff fight with its largest international trading partner, some local analysts warn the ongoing economic battle could have a significant impact on Utah.
“This (trade war) comes at a cost to our economy,” Miles Hansen, president and CEO of World Trade Center Utah, said Wednesday at the Kem C. Gardner Policy Institute in Salt Lake City.
Hansen said what he once described as a “trade dispute” with an effort by both nations “to create leverage on the other side” as part of the negotiating process has become an all-out trade war.
“Now it appears that both sides are taking actions to try to maximize the cost for the other side in the hope that they can get back to the negotiating table,” Hansen told the audience of local leaders and media during a conversation with Gardner Institute Director Natalie Gochnour at the organization’s monthly Newsmaker Breakfast. He added that neither side is gaining much headway toward its economic objective.
Hansen said the United States and China are closely intertwined economically with both sides relying on the other regarding a host of economic matters.
“This has been a mutually beneficial trade relationship for a long time,” he said. “It’s important to find a solution to this trade war so that we can move forward with that relationship.”
He added that there are serious, legitimate concerns about Chinese trade policies from lack of protection for international intellectual property, lack of market access, forced technology transfers requiring companies wishing to do business in China to take that technology to China, significant government subsidies to Chinese state-owned enterprises that give an unfair advantage over foreign competitors, as well as monetary policies that undervalue Chinese currency to make it cheaper for foreign countries to buy Chinese products.
It’s important to find a solution to this trade war so that we can move forward with that relationship.
–Miles Hansen, president and CEO of World Trade Center Utah
“All of these trade polices have the effect of giving Chinese companies and China unfair advantage in the global economy,” Hansen said. That approach was tolerated around the world for a long time when China was a developing economy, he said, but now nations like the U.S. are less willing to accept such biased behavior from what has become a global economic superpower.
“There is a growing sense in the U.S., Canada, Mexico and Europe as well that China needs to play by the same rules as everybody else,” he said. Now with the U.S. and China both posturing, the challenge will be to find compromise that will allow each side to “save face” and move forward, he added.
Until then, business owners and consumers will pay the cost of this ongoing conflict, he said.
Among the biggest losers could be Utah consumers and producers. Last year, imports from China to the Utah tallied $2.7 billion, with 99% coming from mainland China. The number of Chinese imports has risen fairly constantly over the past last nine years with the peak in 2018 — nearly double the level in 2010, Gochnour said.
The top imports included computers and electronics, electrical equipment, appliances and components, miscellaneous manufactured commodities, furniture and machinery, she added. Conversely, Utah exported $1.3 billion to China last year — down from $2.4 billion in 2017.
Utah’s top commodity exports to China are primary metals, including gold, followed by computer and electronic products, chemicals and food, Gochnour said. Comprising about 9% of total exports, China ranks as Utah’s third-largest export partner behind the United Kingdom and Canada.
Hansen said Utah companies have struggled to navigate the various tariffs China has imposed on locally produced goods and services, resulting in significant declines in revenue this year and last year. Similarly, consumers will begin to feel the effects of the new tariffs in the form of higher costs for Chinese goods, he added.
As it stands, neither side is “winning” so far in this metaphorical game of chicken, Gochnour said. With the U.S. economy straddling the lines of a possible recession, Hansen said the trade war could have a direct impact on the state of the nation’s economic future.
“The trade war puts downward pressure on the economy. Whether or not it’s enough to push us into a recession — I don’t know for sure,” he said. “But I do know there isn’t an economist in the country that doesn’t recognize the fact that the trade war is having an economic impact on the country at a time when there are several indicators that the economy may be slowing down.”