Washington state’s merchandise exports grew modestly last year, but overall this key measure of trade is down compared with earlier years in the current expansion. And this trend predates the Trump administration’s tariffs.

In 2018, state merchandise trade totaled $77.7 billion, up 1.7 percent over the previous year

However, according to Commerce Department data, this is nearly $13 billion lower than the peak year of 2014. State merchandise exports had fallen each year after. Among the drop-offs has been “transportation equipment” (read: airplanes and components), Washington’s biggest export category. But almost every category was stagnant or down over these years.

Exports to China, Washington’s biggest customer, declined from $20.7 billion in 2014 to $16 billion this past year.

National exports are only slightly down compared with 2014. Nationally, gains in trade of transportation equipment, computer and electronic products, chemicals, and oil and gas offset slowdowns in other categories.

Behind all this is a global trade slowdown, caused by slower economic growth, especially in developing countries, along with financial volatility. Slower economies hit Brazil, Russia, India, Indonesia and South Africa. China’s slowing growth rate goes back several years. Some studies peg the slowdown as going back globally as far as 2010 or even earlier.


This school of thought sees us running out of gas from the growth spurts following the reintegration of China into the world economy, and Europe’s strength after the fall of the Berlin Wall.

This isn’t to give the Trump administration’s policy a pass. Earlier this year, the World Trade Organization warned that trade conflict could lead to broader economic problems. The organization’s quarterly trade outlook measure hit its lowest level in nine years.

And this was before the president this week renewed his threat to increase tariffs on $200 billion in Chinese goods from 10% to 25%. This, as trade talks between representatives of the world’s two largest economies are entering a critical endgame.

These new tariffs would bring inevitable Chinese retaliation on American goods, and a full-scale trade war.

The price of these duties is almost exclusively paid by U.S. consumers and customers, according to an extensive study by economists from the New York Fed, Columbia University and Princeton University.

So much for Trump’s assertion that “trade wars are good and easy to win.”


Trump also needlessly bullied key allies Canada and Mexico into negotiating a new NAFTA, further increasing uncertainty. (And Congress has yet to approve that treaty). Trump imposed tariffs on Canadian steel and aluminum, and plans to do so on Mexican tomatoes. In every case, these policies make America poorer.

The trade conflict has hurt China, too. But this only helps President Xi Jinping — one of the authoritarians Trump strangely admires — to stoke nationalism and anti-Americanism.

Perhaps Trump’s Trade Representative Robert Lighthizer has convinced the president that with the U.S. economy going strong, it’s an opportune time to put the screws to China with minimal blowback at home. In fact, this is playing with fire given the longer slowdown and the need to seek ways to expand global trade (e.g. the Trans-Pacific Partnership).

Lighthizer is extremely hawkish on confronting friend and foe on real and perceived trade sins and inequities. He is leading the nation sharply away from the post-World War II order that emphasized alliances, expanding trade with lower barriers and an American-led, liberal, rules-based order. Among the chief goals was to manage the peaceful rise of China.

This is new and dangerous ground.

Or maybe not new ground. The Smoot-Hawley tariff of 1930 helped make a contraction into the Great Depression as beggar-thy-neighbor retaliations spread around the world. This enhanced the appeal of fascism and militarism. We know how it ended.

Economy Notes:

• With output expanding 5.7 percent adjusted for inflation, Washington turned in the strongest economic performance among the states this past year. This was almost twice the national rate and places our state’s economy as the nation’s ninth largest, entering the top 10 for the first time.


In 1977, Washington had the 17th largest economy, but has moved up strongly during this expansion. Washington GDP totaled nearly $577 billion in the fourth quarter of 2018, according to the federal Bureau of Economic Analysis.

Elsewhere in the Northwest, Alaska’s GDP fell 0.3% while Idaho’s grew 4.1% and Oregon’s 3.4%.

• The Puget Sound Shipyard in Bremerton received generally good marks on a recent U.S. Government Accountability Office report that found poor conditions at more than half the 21 military depots it reviewed. Of the $2.4 billion spent by the nation’s four naval shipyards between fiscal year 2012 and 2017, $841 million — approximately 35% — was spent there. Still, 29% of projects were completed 70 days or more late.

• Washington ranks third in the Bloomberg U.S. State Innovation Index. California and Massachusetts were the most- and second-most innovative states. The index measures R&D, productivity, tech density, STEM professionals, scientific and engineering degree holders and patents.

Oregon ranked seventh; Idaho 25th and Alaska 27th. The least-innovative state was Mississippi.

• Since the Great Recession, U.S. personal income has grown only 1.9 percent, adjusted for inflation, compared with a 30-year average of 2.7 percent. This comes from a new report by the Pew Charitable Trusts. Washington came in considerably better, at 2.9 percent since 2007 and 4.2 percent over the past year.


• A J.D. Power report on banking customer satisfaction also lists market share of Seattle’s largest banks. They are: Bank of America 27%, Wells Fargo, 13%, Chase 13%, US Bank 10% and Key Bank 9%.