Vermont’s exports are plummeting. In 2010, Vermont firms sold more than $4.3 billion worth of goods to customers in other countries, but exports have been falling steadily every year since then. Last year, Vermont firms sold less than $3 billion worth of goods to customers in other nations, the lowest level since 2003. By contrast, over the same period exports nationally have steadily risen.
Historically, most Vermont exports went to Canada, but that has been changing over time. In 1990, Canadian customers bought 85 percent of Vermont’s exports. By 2010 that had fallen to less than half and last year to just over one-third of the state’s total.
The biggest growth has been to Asia — primarily China, Hong Kong, Malaysia, and Taiwan. In 1990, those countries barely registered on the list of countries that bought Vermont products. By 2010 Asian companies and consumers purchased more than 40 percent of all of Vermont’s exports. Following the pattern of total exports, the dollar amount of exports to Asia has fallen. Last year Asian nations were the destination of only 37 percent of Vermont’s exports.
It’s not just geography that matters. More than half of Vermont exports are integrated circuits and similar products. Most, but not all, of those are produced at the GlobalFoundries plant in Essex Junction. A decline in those exports explains a lot of the decline in Vermont’s overall exports. In the last seven years, exports of those products have fallen from $2.7 billion to $1.6 billion. That explains $1.1 billion of the $1.5 billion decline in Vermont’s exports.
After the $1.6 billion in integrated circuits and chips, the next largest export is $70 million of exercise equipment. That’s a tiny fraction of the high tech products that dominate Vermont exports. It’s also something that is definitely under the radar screen of most people’s view of Vermont exporters and important manufacturers. My guess—the names of the firms doing the exporting is not given in the official statistics — is that Concept 2 in Morrisville is responsible for most of that $70 million. Concept 2 makes rowing machines and oars used by competitive rowers.
Exports are important to Vermont and to any economy for a number of reasons. As Adam Smith wrote more than two centuries ago, they allow people and businesses in a country, or a state, to specialize and produce more goods and services than we could hope to consume ourselves. Moreover, firms that export tend to pay higher wages than firms that supply only a local market. Finally, exports allow us to purchase goods that other people can produce more cheaply than we can. In a nutshell, the more we export, the more we are able to import.
Although we often hear about the benefits of buying and producing things locally, we benefit from buying goods produced outside of our borders, in other states and in other countries. That gives us access to a wider variety of goods, more often than not at lower cost and higher quality than would be available if we tried to produce those same goods locally.
That’s one major reason why the Trump Administration’s policy goal of reducing imports hurts American consumers. Raising tariffs and restricting imports means we will pay more for those products. If people in other countries sell less to us, they will also buy less from us. Vermont businesses that export are good for our economy. Businesses outside of Vermont that export to us benefit us just as much.