To sustain a healthy, resilient economy and high quality of life for current and future generations, we need to make things, not just buy things. We need to responsibly utilize, not just preserve. We have to make what we can here at home (and prioritize those things that we can make really well) to create good job opportunities and help ensure the products we consume are made to our environmental and social standards. A vibrant local manufacturing sector isn’t just good for our current economy, it’s critical to maintaining our knowledge and capacity to create, fix, and build long into the future.
Having access to international markets, whether to sell product or import materials, is critical to many domestic manufacturers. The trade war that the U.S. began earlier this year by imposing tariffs on Chinese goods threatens that access. Prolonged uncertainty due to trade wars and hostile relations with important allies and trading partners is fundamentally bad for business. International trade helped Hampton weather the Great Recession during which time our lumber exports to Asia increased from 5 percent of total sales to 20 percent. Building working relationships with customers in Asia took time. Disrupting those relationships could affect business for years to come. In addition, the trade war has already increased the cost of steel and aluminum, which will drive up inflation and hurt the entire American economy.
International trade by its very nature requires dialogue, collaboration and mutual gains. With diverse interests involved, negotiating trade agreements is hardly ever quick or easy. In the lumber business, we have experienced these challenges first hand. Finalizing the Softwood Lumber Agreement between the U.S. and Canada has been a long and frustrating process but a process that is necessary and valuable. When there is disagreement over trade policy, negotiation is always preferable. The U.S. government’s heavy-handed approach is generating a lot of attention but with little in the way of actual negotiations taking place, where does it lead? Without meaningful dialogue with other countries, trade wars leave us with uncertainty, economic losses, and rising prices throughout the economy.
I am an accountant by training, not an economist. I do not know what the long-term effects of a trade war with China might be nor which countries or sectors, if any, are likely to come out ahead in the end. Certainly there have been abuses by some countries and fair trade is important in global commerce. But with the world’s two largest economies engaged in a game of chicken, the stakes are high and the implications global. If nothing else, this trade war should reveal how interconnected our economy is with those of other nations. Perhaps that realization will bring the powers that be back to the negotiating table. Let’s hope that happens sooner rather than later.
Steve Zika, CEO