Idaho's trade relations with China continue to dip while business with Taiwan grows
In the wake of a trade war during the Trump Administration, the United States, and Idaho in particular, was beginning to enjoy an increase in exports and imports from China. But then spy balloons, military escalation and a slew of new restrictions from the Biden White House have quickly deflated that business.
“We were starting to see some signs of a thaw. But as many of us know, the air has been somewhat let out of that balloon,” said Dr. Jack Marr, Clinical Associate Professor of International Business and Global Programs Director at Boise State’s College of Business and Economics.
Marr visited with Morning Edition host George Prentice to talk about the current tensions with China and Idaho’s significant growth of trade with Taiwan, much to the displeasure of Chinese officials.
“China, back in 2016, was Idaho’s No. 2 trade partner and is now down to No. 7, and Taiwan has moved up measurably.”
Read the full transcript:
GEORGE PRENTICE: It's Morning Edition. I'm George Prentice. Good morning. Well, something's in the air with US-China relations. Something much more than spy balloons. Trade tensions are hanging over the US and much of the Western world. And it is more than a geopolitical risk because here in Idaho there are millions of reasons, which is to say millions in dollars in Idaho, exports to China and imports from China. Dr. Jack Marr is here. He is a Clinical Associate Professor of International Business, as well as the Global Programs Director at Boise State's College of Business and Economics. Dr. Marr, good morning.
DR JACK MARR: Good morning, George, and thank you so much for having me on this morning.
PRENTICE: How would you best characterize where we are right now trade wise with China?
MARR: Well, that's a very interesting question. And we're in interesting times, George. I believe that we were starting to see some signs of a thaw. But as many of us know, the air has been somewhat let out of that balloon. So, the question is, is it going to pop? And I think we're at a point where there's many, many mixed signals. If you look over the entire relationship, both trade and investment and mutual contacts, in some ways, it looks quite grim. But in other ways, in 2022, despite all the tensions, we set a record, a trading record again, with China. So there's signs going both ways. So I think it's very important to separate the overall picture from the specific incidents.
PRENTICE: What is China buying from us? I'm assuming AG is probably near the top of the list, right?
MARR: Ag is absolutely at the top of the list and has been an area where we've seen the most increase in our exports. In addition to that, we sell a lot of manufactured goods to China. We sell all sorts of machinery. We also continue to sell a good deal of technology. But Ag is, I think, the one that's seen the most growth over the past few years.
PRENTICE: So we did see a decrease right after well, quite frankly, some of the saber rattling during the Trump administration and the trade wars, if you will. So am I hearing that? There has been an increase again.
MARR: If you look at the breakdown by industry in terms of export, AGG has had the biggest increase over the past few years and it's particularly driven by spicy soybeans. Soybeans are an interesting commodity in China. They're considered less of a commodity and more of a value-added food product. I did some research on this for the US Department of Agriculture back when I was with them in the 1990s, and at the time we were the number one exporter with Brazil being in second place. Last year the US saw over a 16% increase, particularly in soybean exports to China. And this is partly because of a drought in Brazil. But I think there are other underlying factors as well.
PRENTICE: Are we still selling a fair amount of frozen potatoes to China?
MARR: The frozen potatoes…that trade has sort of died off as US producers, particularly Simplot have gained capabilities to regionally export. That was that was sort of the beginning in order to allow McDonald's and KFC to have French fries, which were up to US standards. That's been that's been offshored to China more over the past few decades.
PRENTICE: We've had tensions with China for decades. But can you put this spy balloon crisis, if you will, into some perspective? How big of an issue is this… as far as our working relationship with China?
MARR: I think the spy balloon issue is still sort of uncovering itself. There had been incidences of sightings of similar balloons in the past. This is the one that caught the most attention and garnered the largest response. As I understand, it's still not exactly clear what the nature of the balloon was, although it was certainly flying over some questionable territory. I think that nations definitely have apparatus to pay attention to each other. What's interesting to me about the recent incident is that it came at a time of a mutual thaw. There had been a visit planned of Secretary of State Blinken to visit his counterpart, which has been postponed. Regardless of what the intention was, I think, which is something that we need to be clear about. It has had a very derailing effect.
PRENTICE: Dr. Marr, it's important that we note that Idaho, our governor, Brad Little, recently led a trade mission to Taiwan as recently as December. No big surprise… that came with some negative response from China as they have responded to other trade missions from other states and foreign dignitaries. How important is Idaho's trade relationship with Taiwan?
MARR: Idaho's trade relation and overall relationship with Taiwan is absolutely critical and has a very long history dating back to Morrison, Knudsen and sort of far into the past. And that relationship has grown over the years. Taiwan is a functioning democracy and a core strategic partner in many ways in Asia Pacific. I spend a lot of time in Taiwan myself, and I think it's fantastic that we have a deep relationship with Taiwan. In terms of Idaho. Taiwan. China. Trade. Taiwan has moved up in the rankings over the past few years. Actually, China back in 2016 was Idaho's number two trade partner and is now down to number seven. And Taiwan has moved up measurably. And I think this is fantastic. What has to be kept in mind, however, is that Taiwan has a population which is orders of magnitude smaller than China and as an economic entity remains smaller. So in the long term, it's impossible for a rich, thriving economy the size of Taiwan to ever supplant China because it will never be as big. It's sort of like comparing Belgium to the United States. So I think that while this is very good, it's important to realize that you can't replace apples with oranges.
PRENTICE: Dr. Jack Marr is clinical associate professor of International Business and the Global programs director at Boise State's College of Business and Economics. Dr. Mara, I look forward to many conversations with you going forward. But for now, thank you so very much for giving us some time this morning.
MARR: And thank you so much for having me on the show, George. I've enjoyed it and would be happy to join again in the future.
Find reporter George Prentice on Twitter @georgepren
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