Study: Trade backed 1.1M state jobs

Report analyzing data from 2018 shows international commerce is critical to jobs, economic recovery.
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A new study from Business Roundtable finds international trade supported 1,105,400 jobs in Michigan in 2018 and represented nearly one out of every five jobs in the state before the pandemic.

Since 1992, before the implementation of the North American Free Trade Agreement (NAFTA), the share of jobs tied to trade in Michigan has increased by 87%, and trade-related employment grew six times faster than total state employment from 1992 to 2018, according to Washington, D.C.-based Business Roundtable.

Although the COVID-19 pandemic resulted in significant economic disruption to U.S. workers and businesses, the data show that opening markets to American goods and services around the world through rules-based trade is critical to U.S. economic recovery and helping American workers and families get back on their feet, Business Roundtable said.

“Defeating the COVID-19 pandemic, accelerating economic recovery and expanding opportunities for all Americans depend on opening foreign markets to American goods and services, removing barriers to trade and investment and strengthening supply chain resilience,” said Lance Fritz, chair, president and CEO of Union Pacific and chair of the Business Roundtable Trade and International Committee.

“Free and fair trade supports U.S. manufacturing, farmers and service providers by reaching more customers, strengthening U.S. innovation leadership and creating good-paying American jobs. With tens of millions of American jobs at stake, Business Roundtable CEOs will continue to work with policymakers and key trading partners to promote rules-based trade that opens new markets and levels the playing field for American workers, farmers and businesses.”

The study — prepared by Trade Partnership Worldwide — analyzes the latest available employment and trade data from 2018 and examines the net impacts of exports and imports of goods and services on American jobs.

Highlights

  • North America: Trade with Canada and Mexico supported 356,800 Michigan jobs, which Business Roundtable said underscores the importance of fully implementing the United States-Mexico-Canada Agreement (USMCA) — which took effect July 1 — to strengthen North American competitiveness.
  • China: Trade with China supported 211,700 Michigan jobs in 2018, highlighting the importance of fully implementing the Phase One trade agreement that took effect Feb. 14; expeditiously negotiating additional structural reforms in China; and removing additional tariffs and barriers to trade between the two largest economies in the world, Business Roundtable argued.
  • Exports: Michigan exported $58.3 billion in goods and $15.1 billion in services in 2018, including motor vehicles, motor vehicle parts, motor vehicle bodies and trailers and travel services.
  • Small businesses: Of Michigan’s 15,015 exporters, 89% are small- and medium-sized companies with less than 500 workers.

Paul DeLaney, vice president of trade and international for Business Roundtable and author of the Michigan-specific report, spoke to the Business Journal in October.

He said the report reaffirms that Michigan is “an exporting powerhouse” in the United States, thanks largely to its proximity to Canada, but also due to strong trade ties with Mexico, China, Germany, Japan and the United Kingdom.

“This continues the trend that we’ve seen in Michigan, both from a manufacturing side, services and agriculture side, that there’s over 1.1 million jobs in Michigan tied to these trade relationships,” he said.

DeLaney noted that since 96% of the world’s population and 75% of its purchasing power is outside the U.S., as the country positions itself to recover and bring back trade-dependent jobs in the wake of COVID-19, fully implementing the nation’s various free trade agreements will be increasingly important to the economic competitiveness of the U.S.

According to the report, in 2018, $4.7 billion of Michigan’s services exports, or 31%, went to FTA partners, and FTA partners purchased 30.9 times more goods per capita from Michigan than non-FTA partners.

“What we’ve seen from the data over time is where the U.S. works with its partners to lower barriers to trade, we see increases in exports, increases in sales and increased opportunity. We will continue to do this study year by year, and hopefully it can show that those trends are sustained,” he said.

DeLaney noted that the impact of COVID-19 on trade will be studied closely in the next few reports and hopefully will help inform policy makers so they can focus on new opportunities that will help American workers get back on their feet.

He said although it’s still early, he is seeing encouraging signs of supply chain resilience as manufacturing companies look to diversify not only what they are producing but where, how and for whom, so that they can become flexible enough to better weather future challenges.

BRT’s report on Michigan trade can be found at bit.ly/MITradeReportBRT.

The full national study can be found at bit.ly/USTradeReportBRT.

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