Will the partial trade agreement with China help the local economy? GVSU economist weighs in
Posted on January 06, 2020
Reaction from the local business community to the partial U.S./China tariff agreement has been lukewarm, said Brian G. Long, director of Supply Management Research in Grand Valley State University's Seidman College of Business.
Long also said remnants of the General Motors strike are holding down the West Michigan economy. Long surveyed local business leaders and his findings below are based on data collected during the last two weeks of December. View the full report here.
The survey's index of business improvement (new orders) edged up to -7, from -9. The production index also rose to -7 from -9. The index of purchases was marginally better at -17 from -18, and the employment index rose to -2 from -9.
"Some of the tariffs on imported materials may be reduced or eliminated, which will help with the reduction in the purchase price for some commodities and materials," said Long. "Except for aircraft and some miscellaneous construction equipment, we sell China almost no finished products. Our main exports to China are farm commodities, which have gained about 10 percent in price since the news leaked out about the so-called Phase I trade agreement."
Long added that bigger issues, such as China's governmental subsidies for certain firms, will need to wait for a possible second agreement later in the year.
The Institute for Supply Management survey is a monthly survey of business conditions that includes 45 purchasing managers in the greater Grand Rapids area and 25 in Kalamazoo. The respondents are from the region's major industrial manufacturers, distributors and industrial service organizations. It is patterned after a nationwide survey conducted by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as "same," "up" or "down."
For more information, contact Brian Long at (269) 870-0428.