State Exports Down For The Seventh-Straight Quarter
State exports dropped yet again during the third quarter of 2016, a trend that has been ongoing since the start of 2015.
A report released Monday by the Minnesota Department of Employment and Economic Development (DEED) found state exports fell 2 percent for the July through September period.
A decline in the overall value of Minnesota exports this quarter and in past reports has largely been attributable to two factors: a strong U.S. dollar and a dropping value of goods being sold to Minnesota’s two largest trading partners, Canada and Mexico.
For the most recent trading period, exports to Canada fell 13 percent to $1 billion. The value of goods sold to Mexico also slid by 3 percent to $617 billion.
State exports are an important measure of the Minnesota economy as they account for $33 billion in annual revenue and tens of thousands of jobs.
Optical and medical products have regularly maintained the top spot among goods purchased from Minnesota—third quarter sales were up 1 percent. However, other major Minnesota industries—particularly manufacturing—continued to struggle. Exports of machinery were down 12 percent and vehicle exports fell 22 percent.
Exporters are also concerned with Donald Trump being elected president given his stance on international trade deals.
Cosette Creamer, an assistant professor of political science at the University of Minnesota who specializes in international business and law, told TCB in November that Trump’s vow to “rip up” all existing international trade deals could land a significant blow to Minnesota’s export industry.
“It would potentially be the industry hit the hardest,” Creamer said.
Minnesota’s relationship with Asia
Dealings with Asia, specifically, could be affected by the elimination of the Trans Pacific Partnership (TPP) agreement, Creamer said. Over the past decade, she noted, Minnesota exports to TPP countries, such as Singapore and South Korea, have risen 82 percent.
DEED’s third quarter report found exports to Asia rose 12 percent year-over-year to $1.7 billion. Minnesota’s top three Asian buyers of goods and services were China ($605 million), South Korea ($217 million), and Singapore ($160 million).
“Asia has historically accounted for a larger share of the state’s exports than national exports,” said Shane Delaney, communications director for DEED. “Minnesota businesses as a whole have long established footholds in Asian markets and have developed strong relationships with their Asian customers.”
Since 1996, Minnesota’s statewide share of total exports to Asia has been larger than the national average every year, with the exception of 2004.
“About two-thirds of U.S. exports are sold worldwide by large U.S. companies — which include many large Minnesota companies,” Delaney said in reference to Cargill, General Mills and other local players.
Despite the potential collapse of an agreement on the Trans-Pacific Partnership (TPP), Delaney believes the state’s ability to build relations with Asian countries is likely to continue in the future.
“Minnesota has been able to successfully expand sales in Asia — whether existing, emerging or new markets — well before the TPP,” he said, “and we would expect that success to continue.”