Unlike the World Series, trade has many winners

Posted on by Dan Anthony

wrigley_field_sign_cubs_win

Last night, the Chicago Cubs beat the Cleveland Indians in the 10th inning of Game 7 to win their first World Series since 1908. It was an incredible end to an amazing series. There will be much rejoicing in the city of Chicago as lifelong fans get to celebrate the first world championship in 108 years. (Trust me, I live with one.)

As the American Apparel and Footwear Association’s Steve Lamar wrote the other day in The Hill, there are numerous ways that international trade is like baseball. Those similarities can teach many lessons. For example, competition is fierce between companies both within the United States and across the globe. Yet there is a very important difference between trade and baseball: trade can (and does) have many winners.

Take our new research on potential tax cuts if Congress passes TPP. It shows that TPP could eliminate $650 million in tariffs on imports into Illinois and eliminate $1.3 billion in tariffs on imports into Ohio in the first five years. Unlike baseball, where no result could have made both Cubs and Indians fans happy, these potential savings from trade are not mutually exclusive. TPP tariff reductions on imports into Illinois in no way prevent companies in Ohio from benefiting – or Alabama or Wyoming or any other state. Cubs and Indians fans can both win!

These gains add up. If US tariffs of 20-30 percent on footwear and clothing go away, the American families have more money to put towards other priorities, whether that is other goods, saving for college, or even baseball tickets. If tariffs on industrial goods and raw materials are eliminated, American manufacturers can lower prices (thus driving up sales) or invest those savings into developing new products, hiring new workers, or purchasing needed equipment. Once again, there can be many winners.

With so many aspects of our lives viewed through a lens of either winning or losing, it can be hard to see trade differently. There can be only one World Series champion. Cubs and Indians fans both know that is unquestionably true. Fortunately, the TPP (and trade more generally) is subject to a different set of rules where many can win.

TPP could cut $1.3 billion in taxes on Ohio employers over five years

Posted on by Dan Anthony

According to new research on Ohio’s imports from the so-called “new TPP” countries not covered by existing free trade agreements (i.e., Brunei, Japan, Malaysia, New Zealand, and Vietnam), the TPP would cut import taxes paid by Ohio employers dramatically. These benefits come in addition to opening new markets for exports and modernizing outdated rules.

How much could Ohio employers save? In 2015, imports into Ohio from new TPP countries faced an estimated $357.3 million in tariffs (i.e., taxes). TPP could eliminate 77 percent of these taxes by year five, saving as much as $1.3 billion over that period, as shown in the graph below.

tpp_state_ohio_cuts

What types of products would be impacted? Imports into Ohio are a mix of raw materials and components used by American manufacturers and finished goods sold directly to American families. Clearly, not all the tariffs go away: many imports are subject to phase-outs and tariffs would remain in place for up to 30 years on certain sensitive items. The box below highlights select imports into Ohio whose import taxes would fall to zero upon implementation of TPP.

tpp_state_ohio_products

More information. The one-page fact sheet with the above information (and more) on potential TPP import benefits for Ohio employers is available here, while sheets with potential TPP import benefits for all states are available here.

If your company imports from TPP countries, you can learn how TPP would impact your products here.

For more general info on trade and investment between specific states and TPP countries, you can visit the Trade Benefits America state resources page.

Kasich supports TPP that could save Ohio importers hundreds of millions of dollars

Posted on by Dan Anthony

On Friday, Ohio Governor John Kasich joined a bipartisan group of political and business leaders at the White House to talk about the importance of passing TPP this year. Kasich also penned an op-ed in the Wall Street Journal, which noted:

With 40 million American jobs dependent on trade, the U.S. economy is already interconnected with the rest of the world. So TPP is not about something “new” as much as it is about helping existing U.S. companies—large and small—find growth opportunities in Japan, Australia, Canada, Chile, Malaysia, Singapore, Vietnam and four other Pacific Rim nations that want to increase trade with America.

There is little doubt that Ohio is an export powerhouse and that the TPP countries are very important export markets. According to the Business Roundtable:

  • Ohio exported more than $30 billion in goods and services to TPP countries in 2014;
  • TPP countries accounted for nearly 60 percent of the State’s goods exports, and
  • U.S. trade – exports and imports of goods and services – with TPP countries supported about 560,000 jobs in Ohio.

The last bullet contains a key, but often overlooked, point: those 560,000 jobs in Ohio rely on exports and imports. And the TPP provides significant potential benefits for the Ohio companies that import from TPP countries, their workers, and their customers.

In 2015, the United States collected an estimated $357 million in tariffs on imports into Ohio from the TPP countries with which the United States does not have an FTA already (i.e., Brunei, Japan, Malaysia, New Zealand, and Vietnam). That is nearly $1 million per day. Among all states, only imports destined for California and New Jersey paid more.

tpp_top_5_states_tariffs_paid_2015
Much of the tariffs were assessed on apparel from Vietnam, but a number of industrial products used by U.S. manufacturers also faced millions of dollars in tariffs. For example, Ohio imports of:

  • wire harnesses – the electrical connectors that make auto blinkers blink and windshield wipers wipe – from Vietnam alone faced about $5 million in tariffs;
  • machining centers and lathes – factory equipment used for metalworking by American manufacturers – from Japan faced $5 million in tariffs, and
  • the windshield wipers and blinkers mentioned above from Malaysia faced nearly $500,000 in tariffs.

The TPP would eliminate each of those tariffs immediately, making products manufactured in Ohio with those parts that much more competitive in global markets. Products accounting for about half of the tariffs paid ($177 million) on Ohio imports from new TPP countries would get immediate duty-free treatment under TPP.

For those gains to occur, Congress must first pass TPP. Kasich summed up the choice facing Members of Congress later this year:

Saying “yes” to TPP makes possible the economic growth American businesses and their employees want and need. Saying “no” is not a neutral or beneficial move—far from it. Turning down TPP slams the door on a way forward for job creation, and it will have a choking effect on the jobs, companies and communities that are now sustained by trade.

This is particularly true for jobs, companies and communities in Ohio with strong trade ties to the TPP countries.

If your company would benefit from U.S. tariff cuts under TPP, please add it to our free TPP importers list here. You can learn more about potential TPP import benefits here.