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Local Businesses Worry About Trump’s Trade Measures

Cities fear Trump policiies will not generate more shipments of export cargo and import cargo in international trade.

Local Businesses Worry About Trump’s Trade Measures

Local reactions to President Donald Trump’s executive orders have grabbed headlines. Mayors are standing by their sanctuary cities status. Protesters have gathered in airports to decry the refugee ban.

Less visible are the mounting concerns expressed by local business groups about the impacts of America First trade policies that may put America last.

Cities and metropolitan areas across the country will bear the costs of a protectionist agenda. The industries that fuel jobs and opportunities in these metro areas—large and small, red and blue—depend on foreign customers, inputs, and investments to thrive. These range from high export-volume economies like New York and Houston, to high export-intensive smaller communities like Wichita, Kansas, and Columbus, Indiana And trade has become increasingly important to local communities over the years as a source of jobs and income. In 2015, exports accounted for about 10 percent of GDP, on average, in the 100 largest metro areas, up from 7.5 percent in 2003. In short, American households, workers, and firms will take a hit if a trade war from punitive measures ensues.

That’s why we’ve noticed an uptick in unease among business leadership groups, in private conversations or public statements, about the Trump administration’s trade stances, particularly towards NAFTA. In Iowa, the Greater Des Moines Partnership, the Iowa Farm Bureau Federation, and local economists have called for caution in weighing trade policy changes.
Some are concerned that new or increased tariffs on priority market Mexico could hurt demand for the state’s highly global agricultural industries. Businesses in Chicago and Wichita levied warnings about policies that would undermine commerce with Mexico and Canada. In San Diego, where firms and entrepreneurs look south and west for business opportunities, Trump’s withdrawal from TPP and repositioning of the US trade relationship with Mexico drew ire. In particular, the San Diego Regional Economic Development Corporation criticized these actions as undermining the competitive advantages that their industries gain from being part of a bi-national region with Tijuana.

“Here in San Diego, we marvel at the transformation over the past 50 years from a sleepy Navy town to a global city that develops life-changing technologies,” two San Diego civic leaders wrote in an op-ed last week, “We didn’t get here by building walls, and we won’t get ahead that way either.”

This heightened awareness of trade’s import to local economies stems from the work of coalitions in these three markets—and dozens of other cities and metropolitan areas—to implement global trade and investment strategies. Those innovative strategies, which many developed in concert with Brookings, could unravel as Trump’s policies turn the country inward. Federal policies have (at least historically) played the important role of opening up markets, ensuring fair trade, and offering financing and commercial services. But local leaders play a crucial complementary role in reaching out to under-exporting firms and ensuring they are able to connect to such services and ultimately new customers across the globe.

Amy Liu is vice president and director and Rachel Barker is a policy analyst and outreach manager at the Brooking Institution’s Metropolitan Policy Program. This article originally appeared here.

Trump's transactional style could impact shipments of export cargo and import cargo in international trade.

Redefining the Art of the Deal

Donald Trump’s dramatic move to save 800 jobs at Carrier has attracted praise from supporters who see the president-elect as a man of his word. It has also drawn criticism from experts who view the one-off deal as a political stunt and a dangerous precedent that doesn’t alter the underlying conditions of the economy.

To be clear: for numerous reasons, Trump’s negotiations with Carrier are troubling and do not reflect sound economic policy. Yet we know that Trump’s proclivity for deal-making will persist. His professional experience is a series of transactions that have resulted in tall buildings, private golf clubs, and casinos. And members of his incoming cabinet, as well as leading Republicans in Congress, have signaled their support for this kind of intervention to achieve concrete results for the American people.

The question is: how can Trump’s instincts be adapted to benefit the largest share of people in an open and accountable manner?

Corporate retention subsidies are doled out every day in state and local economic development; it’s the president-elect’s direct intervention, and the power of his office, that makes this transaction news. On its face, the Carrier deal is pretty typical, saving 800 jobs for an unspecified period of time using a modest state subsidy that the corporation didn’t need to be competitive. I’ve written often about how such short-term, isolated, and subsidy-driven transactions to grow jobs and the economy are inefficient and can be better deployed.

Though job subsidies, and the headlines they attract, remain difficult to resist, many metropolitan leaders across the country are shifting from a transactional to a more systemic approach to economic development—one that can deliver better results for residents over the long-term.

Larger federal reforms are certainly needed to grow more good jobs in the American economy, but here are a few ways our new ribbon-cutter-in-chief could carry out future place-based interventions in a more sustainable, scaled manner:

Formally partner with local communities to identify good deals. Many local communities or regions have signature efforts to grow good jobs and connect workers and families to them. Rather than negotiate solely with companies or react top-down to project opportunities, the Trump administration could organize a formal effort to surface bottom-up efforts from communities that meet a high bar for improving people’s lives and could benefit most from federal action. For instance, a new White House Interagency Council on Community Action could focus on how existing federal resources can be better deployed to support key community solutions.

Expand the definition of a deal to include a wider array of transformative community projects. Large firm relocation and retention deals need not be President-elect Trump’s only opportunities for photo-ops and celebratory tweets. Instead, Trump’s administration could emphasize transformational community programs and initiatives, such as large-scale neighborhood redevelopments, industry-community college training collaborations, or initiatives to scale up small- and mid-sized firms.

Support industries, not individual firms. Every region in the country is dependent upon specialized industries to drive growth and opportunity. Some states, such as Colorado and Nevada, have programs that support the growth of such clusters, many of which span urban and rural areas. The Trump administration should work with local communities or regional industry consortia to determine how federal policies and programs can accelerate, not hinder, the growth and competitiveness of entire industries, rather than just one large anchor firm.

The wisdom of the Carrier deal aside, it’s worth acknowledging that Trump’s demonstrated commitment to results and getting things done is also what motivates mayors and other local leaders. Public policy should be geared towards producing tangible benefits for people. But in the realm of transactional deals, lessons learned by leaders across America’s metropolitan areas can help guide the next administration toward a broader, more effective effort to create greater prosperity in communities.

Amy Liu is vice president and director of the Metropolitan Policy Program at the Brookings Institution. This article originally appeared here.