California exports surge; Outlook for trade downright clouded

Beacon Economics is not at all sanguine about the near-term prospects for growth in U.S. exports, although we do believe that California industry is better positioned to cope with the latest tariffs, counter-tariffs, tariff exemptions, tariff pauses, and unilaterally suspended tariffs, than many.

Like everyone else, we have no idea what trade policies the White House might eventually pursue for a period longer than one day (as this Outlook was drafted, the news arrived that President Trump has decided to pause the tariffs he had just announced on imports from Mexico). Canada, however, remains Mr. Trump’s Least-Favored Nation.

The highly provisional nature of President Trump’s tariffs makes economic forecasting, not to mention the more serious business of corporate planning, profoundly challenging. In our California Trade Report following the November election, we wrote that we looked forward to seeing concrete policy proposals emerge to replace Mr. Trump’s often incendiary campaign rhetoric about foreign trade. We expected that the appointment of a Commerce Secretary, a Treasury Secretary, and a U.S. Trade Representative would result in a coherent statement about the administration’s intentions with respect to foreign trade.

Nearly seven weeks in, we're still waiting for a measure of consistency in the application of whatever trade policy has evolved.

In better news, the value of California's export trade grew a robust 7.8% on an annual basis in January (January is the latest data available and precedes the recent tariff activity). This compares to 2.6% growth in Texas and 3.6% growth in Florida.