California exports bounced back in October, but analysts expressed concerns about the future of trade based on statements made by President-elect Donald Trump.
Golden State businesses shipped merchandise valued at $15.21 billion in October, up nearly 4 percent from $14.66 billion in October 2015, according to Tuesday’s report by Beacon Economics, a consulting firm with offices in the Bay Area and Los Angeles.
Beacon breaks out state numbers from U.S. Commerce Department data.
The latest numbers were an improvement from a disappointing September, when California shipments were valued at $13.65 billion, down nearly 3.5 percent from $14.13 billion in September 2015. That came on the heels of $14.12 billion in August, a robust 6.7 percent increase from $13.24 billion in August 2015. That represented the first year-over-year monthly gain since April 2015.
Beacon said a stronger dollar and low overall inflation helped drive the latest numbers.
“The rebound in exports is being driven by better fundamentals in the global economy,” said Christopher Thornberg, founding partner of Beacon. “The commodity glut is still causing issues for some parts of the world, but Europe is growing faster, and the deceleration of the Chinese economy has ended. State exporters are, at least for now, seeing the upside of globalization.”
Beacon noted that exports of non-manufactured goods – chiefly agricultural products and raw materials – soared 24.7 percent year-over-year, to $2.32 billion in October.
“Exports to California’s major trading partners in the Far East saw double-digit growth in October, a fact that underscores the state’s vulnerability should a trans-Pacific trade conflict erupt,” Jock O’Connell, Beacon’s international trade adviser, noted.
Beacon’s report cited several concerns about recent Trump comments that it believes could affect U.S. trade.
The report said that “Trump has double-downed on his anti-Chinese rhetoric in recent days, while also raising the specter of substantial tariffs on goods imported from Mexico. Neither would be beneficial to California’s economic interests.”
The Beacon report contended that a high tariff on imports from China “will cause retail prices to soar.”
“A major trade war could not only throw the U.S. into a recession, it may cause a global downturn,” Thornberg added. “We hope that cooler heads will prevent such a calamity.”
On the import side, California took in $37.76 billion in goods in October, up 2.6 percent from $36.79 billion in the same month last year.
Some goods entering California go to other states, so exports are considered a more accurate measure of the state’s trade health.