Colorado exporters of goods are experiencing a five percent
decrease in sales over last year at this time, which equates to nearly $300
million in lost revenue. This compares
to a national drop in exports of just one percent. Agriculture companies are hit hardest by the
trade war, however the data shows that manufacturers are also affected. A five percent drop is significant overall,
but when you dive into the data and look at the markets that experienced the
deepest losses, you unfortunately see many of our largest trading partners
among the mix.
Largest Losses in Colorado Exports by Market
Manufactured goods with largest decreases
Retaliatory tariffs are unquestionably making Colorado companies less competitive on the global stage. We have also experienced countries retaliating against the U.S.’s tough trade practices with non-tariff barriers as well as changing their buying preferences. With all of this growing uncertainty of trade policies, Colorado companies may be choosing to reduce trade and investment volumes until things blow over. Some may say that it is about time that the United States gets tough on unfair trade practices. However, it seems when we issue tariffs as a widespread tool to send a strong message, it backfired and U.S. consumers and small manufacturers are paying the price. U.S. companies now face barriers in markets where we had none.
At the World Trade Center Denver, manufacturers come to us on a daily basis sharing their challenges with non-tariff barriers that they encounter in other markets. These are some of the examples that have been brought to our attention recently, but we want to learn about the challenges that impact your business:
- Turkey – requiring additional stamps and an accompanying affidavit of authenticity with their certificates of origin.
- Argentina – requiring the Consulate to sign off on all certificates of origin to verify accurate signatures of a chamber.
- China – foreign companies must partner with a local company and give up IP rights; Chinese companies and agencies are directed to purchase non-U.S. products or services in some cases.
- EU – required CE marks and other technical standards on electronics and higher regulations imposed in the name of safety or sanitary requirements.
- Domestic subsidies in other markets, like agriculture in the U.S., are meant to boost certain industries to make them more competitive to foreign markets.
- Managed exchange rates or currency manipulation, of which the Chinese are often accused.
- Favorable Procurement Laws for local firms – this is often disguised as a “Buy Local Campaign” and may seem at first glance to be favorable to local manufacturers. Imagine if a foreign market did the same and favored local companies over U.S. companies in pursuing government contracts. We would be much better off not having these procurement favoritism laws and compete on merit and innovation. We will likely win every time.
In the short-term, Colorado companies have the headaches to navigate the changing policies, tariff rates and a myriad of non-tariff barriers in each market they do business. These challenges must be weighed to see if re-routing a complicated supply chain is necessary, reliable and sustainable. Other stopgap measures like stockpiling inventory and re-engineering products to minimize tariffs may bring short-term relief. The worry we have for those who work globally on a regular basis is how long will it take to recover from the damage done this year? Will retaliation continue or will our strongest trading partners no longer trust us to trade openly and fairly with them? Nothing enhances international relations like trade. What message are we sending the world – are we a country that can compete on our innovative merits and competitive spirit or do we too need government to intervene on our behalf to gain more market share?
Karen Gerwitz is the president and CEO of the World Trade Center Denver, a trade association dedicated to helping Colorado companies connect to global opportunities and enhance Colorado’s economy through trade. To ask questions about specific trade challenges or opportunities, try calling the Help Desk at 1-833-ASK-WTCD or visit the website at www.wtcdenver.org.