How Many States Would Really Be Crushed?

September 25, 2010
The 10 States About To Get Crushed In A US-China Trade War

We've evaluated the states, using data from the U.S. China Business Council, that export the most to China, and companies that might get crushed in each if a trade war commences.

The Business Insider has a list of the 10 states nicely sorted for our entertainment. California comes in at #1. Washington is #2. Texas is #3. Louisiana is #4. Oregon is #5.

This may be hard for some to believe, but we actually need to use ports to ship our products to China. I know. It sounds like crazy talk. Please consider Oregon though. Rumor has it that there is a city in that state where many ships can be seen. I can't remember the name exactly but I think it may have "port" and "land" in it.

Does anyone really believe that the damage of a "US-China Trade War" would be "contained" to just the states with major ports? So how many states would be crushed? Let's come at this from a slightly different perspective. How many states have consumers who buy stuff made in China?

50 sounds about right to me. 50 states would be crushed.

I've tracked the original source of the data back to the US Census Bureau. This is what they say on their website.

US Census Bureau: STATE DATA SERIES

Known Limitations in Uses of the Data

Exports

In certain cases, the export origin of movement does not reflect the transportation origin. Specifically whenever shipments are consolidated, the state will reflect the consolidation point rather than the origin of movement. This effect is particularly noticeable for agricultural shipments. For these shipments intermediaries located in inland states are shipping agricultural commodities down the Mississippi River for export from the port of New Orleans. In this case, the state reflects Louisiana, the state where the port of New Orleans is located, as the state of origin of movement. The states in which the commodities were grown and originally shipped are lost.

Another impact is on the states of distribution for non-manufactured exports. When goods are generally stored and then exported by central offices or intermediaries. The most visible result is to understate exports from the original production state and to overstate exports from the general office or consolidation point. For example, New York has ports that handle high-value shipments of non-manufactured products that may stand out.

Trade Balances

Data users should keep in mind that import and export transactions are compiled with the state information recorded at time the goods enter or leave the United States. This timing produces reporting limitations as outlined in the previous paragraphs, namely that export origin of movement may not always imply production origin and import destination may not always reflect where the goods are consumed or used. In addition the trade data do not provide information to track or monitor interstate flows. Given these conditions, the concept of calculating trade balances at the state level, using destination and origin state data is problematic and may produce unintended results.

As a result, without some more in depth knowledge of individual state trade patterns available to the user, the Census Bureau would discourage using these state data to calculate state trade balances.

I definitely think the "Known Limitations in Uses of the Data" applies here. Perhaps the authors should have tracked that down, or better still simply used some common sense.

I don't mean to be mean, but seriously. The 10 states? The 10? As if there would only be 10? Good frickin' grief. Is it any wonder that I'm bearish?