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Despite an ongoing trade war that has caused considerable readjustments in supply chains and led some to fret about the effects of tariffs on global growth, Georgia’s trade numbers returned to record levels after moderate growth last year.
Exports from the state in 2018 soared nearly 9 percent to a record $40.5 billion, marking the first time international sales figures have ever crossed that threshold.
Total trade — the sum of the state’s imports and exports — also grew to $139.3 billion, an increase of 8 percent over the previous year, the state announced Wednesday.
In a twist that might disappoint U.S. President Donald Trump, the state’s trade deficit grew as imports, which increased 8 percent to $98.7 billion, accounted for much of the growth in total trade, mirroring the national trend.
But at the State Capitol today, Gov. Brian Kemp was celebrating the export numbers, noting that the increase in global sales was padding the pockets of small business owners, those whom he pledged to help during his campaign.
“While the numbers we are announcing today are impressive, the lives of real Georgians are being impacted by this success story,” Mr. Kemp said.
The governor also lauded the state’s two U.S. senators and Congressman Buddy Carter for helping to secure $130 million in federal funding for the deepening of the Savannah port, which he said would help cement Georgia’s competitiveness in global commerce. Georgia is the No. 11 exporting state and the No. 7 by imports.
Backed by representatives of multiple exporting companies on the North Wing steps, Deputy Commissioner for Trade Mary Waters from the Georgia Department of Economic Development said it’s a misconception that exporting is solely the domain of multinationals.
Nationally, 89 percent of exporters have fewer than 500 employees. Of companies utilizing the trade resources of the department, 77 percent have fewer than 100 employees, while half of them have fewer than 50.
Jennifer Tipping, global sales director at Pain Care Labs, thanked the governor and the trade team for the strong business climate in Georgia and their willingness to help small companies like hers. Pain Care Labs makes the Buzzy device, which uses cold and vibration to reduce injection pain.
Resources from the state, the Metro Atlanta Chamber, the U.S. Commerce Department and the Small Business Development Centers have helped the company research markets, then attend trade shows and make client visits.
“You can’t just do everything by email or over the phone. You really have to go to the customers and meet them where they are,” Ms. Tipping said.
KaMin LLC, which exports 40 percent of the kaolin clay it mines from Middle Georgia (a half-million tons to 60 countries in 2017), hasn’t graduated from needing assistance.
“We have 50 years of export experience, but even we run into situations every now and then where we need some expert export help,” said Maureen Halstead, Macon-based KaMin’s director of global product development.
That help will be on display later this month when the department hosts its annual visit from trade representatives from 12 countries. Traditionally the event has honored Georgia-based exporters that have broken into new export markets over the previous year.
It’s hard to know whether the positive trade trajectory, even amid a flurry of negative headlines, is vindication for those who would say fears of the trade war are overblown.
The most severe China tariffs have yet to bite, as Mr. Trump announced in late February that he had pushed back the March 1 deadline he had set to avoid upping tariffs from 10 percent to 25 percent on an additional $200 billion in Chinese goods. Washington and Beijing are still in talks, though no strict timetable has been set for a resolution.
Europe, meanwhile, is still feeling the effects of steel and aluminum tariffs imposed by Mr. Trump on the basis of national security. The EU has protested and imposed some tariffs of its own on U.S. products in retaliation.
Still, Georgia saw strong growth to eight of its top 10 export destinations, with sales to No. 1 Canada basically flat at $6.2 billion and No. 10 Brazil falling by just 2 percent.
In between, some large increases were recorded with Mexico (up 7.89 percent to $3.9 billion), China (up 5 percent to $2.9 billion), Germany (up 24 percent to $2.2 billion), Singapore (up 16 percent to $1.6 billion), the United Kingdom (up 24.5 percent to $1.5 billion), Japan (up 8.8 percent to $1.4 billion), the Netherlands (up 27 percent to $1.3 billion) and South Korea (up 19.4 percent to $1 billion).
Product highlights include $9.1 billion in exports of aerospace products, the state’s perennial top export. Though commodities like pecans were hit by the trade war, agricultural exports stood firm at $4.2 billion, with dairy, cotton and peanut exports growing by 93, 13 and 9 percent, respectively. Georgia medical device exports were up 13 percent to $1.7 billion, while auto exports declined slightly to $3.3 billion.
The rally could be shortlived, though, as some companies started to see the impact of the China negotiations only toward the end of the year.
Thomas Smith, global sales director for Canton-based J&S Chemical Corp., said the even threat of further retaliatory tariffs from China, the company’s largest market, have caused customers there to think twice, even though J&S hasn’t passed on the cost of the tariffs that have already come into effect.
“They’re unsure. We didn’t increase our prices 25 percent due to the extra tariff, but our customers don’t know that. A lot of them have shied away from us for new business, and a lot of them have looked for an alternative or second supplier,” Mr. Smith told Global Atlanta at the Capitol. “It’s been really stressful.”
The company, which makes lubricants used in the die-casting of aluminum auto parts, has been diversifying its exports as China sales fall, with plans to enter Vietnam this year. India and Brazil have also been picking up some of the slack, but China accounts for the lion’s share of J&S’s exports, which make up more than 50 percent of the company’s sales.
On the import side, one major outlier was Singapore. Georgia bought more than $3.5 billion in Singaporean products in 2018, more than six times higher than the $571.8 million imported in 2017. Singapore, with its massive ports and major airport, is a key transshipment hub for Asian products.
Read the full Georgia Department of Economic Development trade report here.
See analysis of the 2017 numbers here: Georgia Exports Recover as Import Growth Leads to Record Trade Numbers