As one of Utah’s newest residents, I am energized by the hive of activity here in the Beehive State. Thanks to Gov. Gary Herbert’s leadership and the ingenuity of Utah’s business leaders and workforce, Utah’s economy is prospering with record low unemployment, rapidly rising wages and one of the fastest growth rates in the country.
Perhaps most importantly, strong economic fundamentals, innovative capital investments — like the Inland Port — and the wise stewardship of stakeholders across the state suggest that Utah is using the boom of the moment to prepare for the economic downturn that — thanks to the ups and downs of the business cycle — inevitably lies ahead. We aren’t experiencing a superficial, bubbling boom with an impending burst; Utah’s growth is deep and enduring. If Utah were a stock, we would all do well to buy as much as possible.
As I meet business leaders across the state to strategize how to help Utah businesses compete and win in the global marketplace, I’m impressed by the grit and swagger with which they ply their trade. Mel Torrie, CEO of Cache Valley-based Autonomous Solutions, speaks of global domination as he and his team of nearly 100 researchers pioneer cutting-edge, deep technology in autonomous industrial machinery and ink deals around the world with global leaders in mining, agriculture and transportation. And Silicon Slopes is full of tech giants, unicorns and startups each driven to revolutionize their market. It’s an exciting time to be in Utah, and the future is bright.
There is, however, a cloud descending on many Utah companies as they grapple with the real costs and uncertainties that come with the ongoing trade dispute. Tariffs are putting Utah companies at a disadvantage and shifting global supply chains as international customers begin purchasing from non-U.S. competitors.
Just ask Sunny Sanyal of Utah-based Varex Imaging Corporation, which employs more than 1,000 Utahns in delivering image processing solutions around the world. Eighty percent of Varex Imaging’s business originates outside the United States, generating revenue that Varex Imaging then spends in the United States to the tune of $300 million a year with about $60 million going to other Utah-based companies.
“We are working to create high-tech high paying jobs here in the United States,” said Sanyal, but tariffs on high-tech components Varex Imaging exports and tariffs on products Varex Imaging and its customers import are essentially “handing the business over to competitors.” Varex Imaging’s stock has fallen by more than 20 percent this month due to lost sales, forcing the company to consider shifting an increasing amount of its operations outside of Utah.
Varex Imaging’s challenges are commonplace across Utah, including the agricultural industry, which contributes $21.2 billion to the state annually and is one of Utah’s top five export industries.
Ron Gibson, president of the Utah Farm Bureau Federation, understands that tariffs can hurt just about all segments of agriculture, even if the food targeted isn’t grown in Utah.
"There is not a single soybean grown in Utah, but we are still affected by the retaliatory tariff on that product," Gibson told me. "As soybean prices drop across the country, farmers in other states will plant fewer soybeans and more of other products like corn, wheat and alfalfa that are also produced in Utah. As a result, the price on all of these items will depress. It’s the same with a host of other foods."
The housing market is also affected by the ongoing trade dispute with Canada. "Since the beginning of last year, rising lumber prices from a lapsed trade agreement with Canada have added nearly $9,000 to the price of a typical new home in the United States," said Michael Parker of Ivory Homes. "Locally, these record-high prices are making housing even less affordable for Utah families." No movement has been made towards renegotiations of the Softwood Lumber Agreement.
Derek Miller, president and CEO of the Salt Lake Chamber put it this way, “The message from Utah should be ‘make deals not war!’ And like in so many ways, Utah can lead out and show the way for the rest of the country on how to make the global economy work for their businesses and their state.”
With nearly 1 in 5 Utah jobs tied to international trade, effective trade policy is essential to our economic growth and resilience. Our trade deals need to be updated and improved, and the preliminary agreement with Mexico is a step in the right direction. Throughout this process, however, we need to be clear-eyed about the costs to Utah of an approach that is overly reliant on threats and tariffs. The overarching objective must be to eliminate, not expand, protectionist policies. Achieving this objective requires American leadership to rally our allies in order to strengthen the rules-based international trade system and to hold China accountable for its unfair trade practices. This approach ensures that Utah companies can continue to use their ingenuity and grit to compete and win around the world.
Miles Hansen is the new president and CEO of World Trade Center Utah. Hansen is a Utah native who joins WTC Utah after serving as the director for Gulf Affairs at the National Security Council in the White House.