Washington’s economy is suffering—the state’s June revenue forecast, released on June 17, revealed the depth of the impact COVID-19 is having on the economy. And although the forecast had limited data on the pandemic’s impact on trade, this key part of Washington’s economy is showing signs of troubled times ahead.

Before COVID-19, trade in Washington was already facing impacts from tariff concerns and issues with the Boeing 737 MAX aircraft. According to a recent publication by the Washington Council on International Trade, state exports hit a 10-year low in 2019 of $53.7 billion. China, our largest single trade partner, implemented tariffs on many products.  Trade on goods subject to these tariffs decreased by 23 percent in 2019; China’s overall trade with Washington dropped to $4.7 billion. Compare this to the high in 2015: $15.2 billion.

In this context, COVID-19’s impacts compound our tariff-related economic woes. For example, 95 percent of Washington’s fourth-largest agricultural crop, potatoes, are consumed in either restaurants or schools. The pandemic forced closure of both, leaving potato farmers with 1 billion pounds of potatoes in storage and tough decisions to make about 2020’s growing season.  

The Northwest Seaport Alliance (NWSA) reported import container volumes were off 22.9 percent in May; exports decreased 15.5 percent. Total international container volume is off so far this year by 21.5 percent.  This slow container volume isn’t limited to the Puget Sound; the Port of Los Angeles recorded its slowest May since 2009. Combined container volumes for the Port of Los Angeles and Port of Long Beach, the nation’s largest port complex, was down by 13.7 percent. Citing ongoing trade policy concerns, Port of Los Angeles Executive Gene Seroka is on the record suggesting as much as 15 percent of import container volume may not return—painting a pessimistic future view.

Looking forward toward opportunity, however, the U.S.-China Phase 1 trade deal promises China will purchase $200 billion in US exports. This includes $36 billion in agricultural products in 2020 and 2021. Robert Lighthizer, chief negotiator for the US, voiced his confidence in this agreement earlier this week. Despite the impacts on supply chains caused by the COVID-19 disruptions, China is on track to meeting these benchmarks.

Focusing back to our local situation in Washington, how will ports respond to the slowdown and disruption in trade? How do we position ourselves for opportunities like the U.S. –China Phase 1 trade pact? WPPA is committed to reviewing and assessing economic information to provide ports clear decision-making direction in uncertain times.