Columbus is the American community with the most to lose should President Donald Trump go forward with promises to rip up trade agreements and impose tariffs on goods from other countries, according to a research group.
The idea of the U.S. slapping taxes on Chinese and Mexican goods, and those countries reciprocating and raising the risk of a trade war, has a local economic leader concerned.
However, Columbus-based engine maker Cummins Inc. — the region’s biggest employer and one of the world’s 200 largest companies — said it’s willing to work with members of the Trump administration to let them know what U.S. companies need to succeed.
The Brookings Institution’s Metropolitan Policy Program ranked U.S. metro areas by their exports as a percentage of their local gross domestic product — the broadest measure of economic output.
Columbus ranked No. 1.
Three other Indiana communities ranked in the top 10: Elkhart-Goshen, Kokomo and Lafayette-West Lafayette.
The numbers don’t show which communities are most exposed to trade with Mexico or China, but do suggest which local economies depend most on foreign markets.
Exports comprise 50.6 percentage of Columbus’ gross domestic product. Cummins plays a big role in driving that number.
“We export a lot. We need to export to be a successful company and grow jobs here (in Columbus),” Cummins spokesman Jon Mills said.
Cummins has had discussions with elected officials at all levels about trade, Mills said. Not only does exporting allow Cummins to be successful and grow jobs in the U.S. — particularly in Columbus — but also allows the company to do more business with 2,500 direct suppliers in the U.S., he said.
“We really look forward to working with the new administration. Trump said he supports strong trade agreements,” Mills said.
If, for example, Trump wanted to renegotiate the North American Free Trade Agreement (NAFTA), Cummins would be interested in what he proposes and be willing to offer its thoughts, Mills said.
However, any actions that could result in a trade war are a concern for Cummins, he said.
“What we need to be successful is strong trade agreements that allow our export products to access 95 percent of the world’s consumers that live outside of the U.S.,” Mills said.
Any trade agreement that reduces demand for goods manufactured in Columbus would be bad for the local economy, said Jason Hester, president of the Columbus Economic Development Corp.
“If, hypothetically, a trade war commences –- that is, if the U.S. increases tariffs on inbound goods and other countries were to do the same to our exported goods — then our local economy would likely be hurt because of our dependence on exported goods and services,” Hester said.
He offered a scenario of the negative impact of a trade war.
A product that is manufactured in the U.S. for export could be hit with a tariff by the destination country. As a result, the foreign customers would have to pay more for the U.S.-made product, thus reducing demand. To keep the customers, the U.S. company would either need to lower costs to compete — such as paying workers less or other cuts — or possibly choose to open manufacturing operations in the destination country for the purpose of serving those global markets.
Hester said he believes the best approach to improving the local economy and job prospects is to expand free and fair trade opportunities, while reducing regulatory burdens.
Additionally, the educational attainment level of the regional workforce must continue to increase so that residents are equipped to fill high-value, high-skill occupations of today and tomorrow, Hester said.
The Associated Press contributed to this report.
The Brookings Institution’s Metropolitan Policy Program ranked U.S. metro areas by their exports as a percentage of their local gross domestic product — the broadest measure of economic output. Here are the top 10 Metro Area Exports as percentage of GDP.
- Columbus, Indiana: 50.6 percent
- Beaumont-Port Arthur, Texas: 40.0 percent
- Lake Charles, Louisiana: 36.9 percent
- Elkhart-Goshen, Indiana: 34.5 percent
- Kokomo, Indiana: 34.1 percent
- Lafayette-West Lafayette, Indiana: 30.9 percent
- Decatur, Alabama: 29.1 percent
- Fond du Lac, Wisconsin: 25.1 percent
- Baton Rouge, Louisiana: 24.3 percent
- Spartanburg, South Carolina: 24.1 percent
Source: Brookings analysis of data from the Commerce Department; Labor Department; Moody’s Analytics; Internal Revenue Service; Energy Information Agency; NAFSA: Association of International Educators; Sabre