Mar 07, 2016 - 12:00pm

What Voters in Michigan and Ohio Should Remember About Trade


Senior Vice President for International Policy

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Port Detroit

The electoral calendar rolls on, with voters in Michigan and Ohio among those preparing for primaries in the weeks ahead (on March 8 and 15, respectively). Amid charges that the United States is taking it on the chin when it comes to international commerce, these two states serve as a useful pair of case studies on the competitiveness of U.S. manufacturers and the unappreciated benefits of international trade.

Contrary to rumor, trade has been a lifeline for Michigan and Ohio — especially in the wake of the recession.

Not only does trade support more than 2.7 million jobs in the two states, it’s fueled the recovery. This is especially true of trade with America’s NAFTA partners Canada and Mexico, which buy 65 percent and 54 percent of Michigan and Ohio merchandise exports, respectively.

This is most obvious in the auto sector, which accounts for one-half of the Great Lakes State’s exports and one-third of those of the Buckeye State. U.S. exports of motor vehicles increased by an impressive 89 percent between 2009 and 2014, topping 2 million cars and trucks for the first time in 2014. A growing share is headed to Asia, the Middle East, and other locations: U.S.-built cars shipped to China have risen sevenfold since 2009.

Michigan exports rose 70 percent in 2009-2014 — much higher than the national average. But Michigan’s exports to our trade agreement partners grew even faster (85 percent). The labor-funded reports that ascribe manufacturing job losses to America’s trade agreements couldn’t be more wrong: Trade agreements haven’t been the problem for U.S. manufacturers. Rather, properly crafted, they can be a part of the solution.

Nationally, trade is vital to U.S. manufacturers — and especially to factory workers. The U.S. Department of Commerce estimates that exports of manufactured goods directly supported 6.2 million jobs in 2014. That’s about half of the 12.3 million Americans employed in manufacturing.

You don’t have to dig deep into the numbers to see that reports of the demise of U.S. manufacturing are greatly exaggerated. According to economic data from the Federal Reserve Bank of St. Louis, U.S. real manufacturing output has risen by approximately 80 percent over the past 25 years:

This represents the continuation of a long trend: U.S. manufacturing value-added has grown eightfold since 1947 in real terms.

In this context, what do America’s manufacturers — who are among the most productive in the world — most need if they are to create more jobs? They need a workforce with the appropriate skills and education. They need a policy environment that isn’t biased against job creation (for instance, by taxing enterprises based on head count or payroll).

Above all, they need more customers, and that means better access to 95 percent of the world’s customers who live outside our borders.

 

One last point: American manufacturers last year contributed $2.17 trillion to the nation’s GDP, according to data from the National Association of Manufacturers, while U.S. exports of manufactured goods topped $1.3 trillion.

Do the math, and you’ll find exports generated revenue of $105,000 for each American factory worker. Compare this with the average annual earnings — including pay and benefits — of an American manufacturing worker: $77,500. How could manufacturers make their payrolls without the revenues they earn by exporting? The short answer is, they couldn’t.

Food for thought for the voters in Michigan, Ohio, and the rest of the union as they head to the polls this year.

About the Author

About the Author

Senior Vice President for International Policy

Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy.