California State to Crumble Due to Trade War

According to some trade experts, California state might stand to lose the most in the trade dispute.

And approximately a year into the U.S.-China trade war, importers and exporters are still looking for a solution in the tariffs. Moreover, additional duties will take effect this month, signaling a not-to-end-soon battle in sight. And it’s just a matter of time before the full impact explodes.

In addition to that, the effect will echo all over the state economies in infinite ways. When it comes to sheer volume, the California state has more trades with China compared to any other state of the country. The total trade with China peaks about $175 billion.

Aside from that, the flow of the investment of China into the state can severely damage California’s GDP growth. And it also can hurt the $2.7-trillion-economy.

Meanwhile, in the latest rise in the trade war, some tariffs became 25% on June 1, which comes as overall economic growth in California starts to calm down. Last 2018, California state rose by 3.5%. Then in the first quarter of 2019, it slowed down to 2%.

For the time being, shippers are bracing themselves for the fallout.

Going to the Port of Oakland in California, John Driscoll, a Maritime Director, was shocked to see last week the volume of containerized agricultural exports for May grew 8.4% higher compared to the previous year. It is the third consecutive monthly addition.

The Maritime Director stated, “What we feel from talking to customers and talking to users of the port is that they are finding other markets. They’re tapping other things. They’re being creative of where they’re sending their products to other countries.”

Exports and Shipments

Moreover, agricultural commodities came 12% higher in the first four months of 2019. And it was led by the rise in shipments to Taiwan, Vietnam, Korea, and Japan. Also, exports to China rose despite the tariffs, though it was only 5%.

Aside from looking for alternative markets around Asia, Driscoll thinks that several exporters are still front-loading, making shipments before more tariffs will arise. This might also be the reason for China’s improvement, and it might only happen temporarily.

Above all, the exports of California state to China, besides from the agricultural products that flow through Oakland, are starting to experience the effect of the trade war.

The volume for the first four months of the year fell roughly 13%. Adding to that, computers and electronic components make up almost 26% of the state’s exports to China.

Back in 2018, California state shipped above $16.3 billion worth of goods to mainland China. Other places with a large number of exports to China are Texas, Washington, South Carolina, and Oregon.