Trump, Trade, and South Carolina
Last month, President Donald Trump came to South Carolina and in a much-hyped event at Boeing in Charleston, proclaimed his “America First” policy that has been one of his constant themes since the first days of his campaign.
He said that he was determined that the country will “rely less on imports and more on products made right here in the U.S.A. … This is our mantra: Buy American and hire American.”
It’s a great slogan. The problem is that the complex realities of global trade do not match his simplistic rhetoric.
And, most importantly for South Carolina, Trump’s saber rattling about trade wars, tearing up trade deals, imposing tariffs and getting tough with China could do real damage to our state’s economy, our jobs and ultimately to our families.
Let’s begin with a few facts, not Trump’s version of ‘alternative facts’ but real facts.
First, the trade numbers. South Carolina is the third most dependent on foreign trade of any state … yes, number three. According to 2015 U.S. Census Department data, 34.8% of our state’s economy is dependent on trade; that’s $69.9 billion out of a total state economy of $201 billion. Only Louisiana at 35% and Michigan at 38% are more dependent on foreign trade.
Second, international business. Today there are about 1,300 international companies operating in South Carolina. We have more international companies than we do public schools in the state. As a state, we rank number one in the country in the amount of direct foreign investment per capita.
Third, the jobs. Today, about 25% of our state’s workforce is employed in these international companies. That’s 130,000 jobs out of a total of 580,000 statewide – jobs that are based in companies that are at least 50% owned by foreign interest.
Fourth, the trading partners. It may come as a shock to many South Carolinians but China is our biggest export partner; in 2015, we sent $4.4 billion in goods to China. Next came Germany with $4 billion in goods; $3.7 billion to Canada and $3 billion to the United Kingdom. And, next time you hear Trump talk about his wall with Mexico, remember that we in South Carolina sent Mexico $2.5 billion in goods manufactured in the Palmetto State.
Fifth, the goods we export. Let’s think about the big ones, the global brands. First is Boeing, where Trump made his speech launching their first Dreamliner 787-10 aircraft. There are 140 different countries supplying parts to the Dreamliner and if one were to list the countries most important to Boeing, it’s pretty much the list of Trump’s favorite targets for insults:
Mexico – Their flagship airline is AreoMexico, an all-Boeing airline. If Trump follows through on his threat of a 20% border tax, expect to see Boeing’s rival AirBus move in trying to steal new plane sales, i.e. S.C. jobs.
China – China buys about 20-25% of Boeing’s output and if Trump makes good on his threats of a trade war with China, look for Boeing sales to fall – and S.C. jobs to fall as well.
Iraq – This country is often the target of Trump’s verbal wrath and they are also big customers of Boeing. The government has ordered 19 Boeing 737s and 10 787 Dreamliners for a total deal of $3.7 billion.
Iran – Boeing is currently trying to close a $16 billion sale of 80 planes with Iran. Trump has promised to rip up the US-Iranian nuclear agreement and he has made all sorts of other ominous threats about retaliation.
And though Boeing is the most visible example of big ticket global exports, the automotive sector is also vital to our state with over 250 companies, suppliers and vendors doing business here. Of the 400,000 cars produced annually by BMW in Greer, two thirds are exported to over 140 countries, principally through the port of Charleston. Volvo and Daimler Mercedes are gearing up for manufacturing and global exports as well.
We are also the largest tire producing state making over 90,000 tires a day at Michelin, Continental, Pirelli and other companies. About one third of these are exported.
And, add to all this the state’s agricultural businesses that export about $1 billion annually.
I don’t think I’ve ever before quoted approvingly a Chinese president on much of anything but President Xi Jinping recently said something at a Swiss international trade conference that applies to us in South Carolina:
“We must remain committed to promoting free trade and investment through opening up and say ‘no’ to protectionism … protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, so are light and air …No one will emerge as a winner in a trade war.”
So, the next time you hear Pres. Trump making ominous noises about a trade war, just remember – we in South Carolina may be the first casualty.