Minnesota exports hit record $23 billion in 2018

Minnesota exports rose 10 percent to a record $23 billion in 2018, state officials announced Wednesday.

Canada and China not only remained the state's largest trading partners, but they produced the largest year-over-year gains.

Minnesota's total export growth outpaced the nation's 8 percent jump and comes amid intense trade tariffs and negotiations with many of America's leading trade partners such as China, Canada and Mexico.

Despite that, Minnesota manufacturers and agricultural product makers moved Minnesota's ranking to 20th highest export state in the nation for 2018. That's up from 23rd. While recent manufacturing surveys and economic reports suggest that export activity in 2019 may be more volatile, export number crunchers were upbeat about last year's performance.

"Minnesota businesses exported more than 1,000 different products to over 200 countries last year," Gov. Tim Walz said in a statement. "These businesses are expanding sales to their core customers as well as finding new markets around the world."

Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development (DEED), said, "Exports continue to play a major role in Minnesota's economy, supporting nearly 118,000 jobs across the state."

Grove credited the Minnesota Trade Office (MTO) for many of the gains, noting the DEED division provided more than 1,500 small and medium-sized business owners with export counseling and technical assistance last year.

MTO officials said Minnesota companies found new trading partners, which helped boost numbers, especially in Southeast Asia, where sales exceeded $1 billion.

Worldwide, Minnesota's top exports in 2018 were medical and optical goods, which grew 19 percent to $4.5 billion.

Other top product shipments were machinery ($3.5 billion), electrical equipment ($3.1 billion), plastics ($1.5 billion) vehicles and vehicle parts ($1.4 billion), and food byproducts ($633 million).

Canada ($4.8 billion) and China ($2.8 billion) were the state's two largest export markets in 2018, followed by Mexico ($2.4 billion), Japan ($1.5 billion), Germany ($1.1 billion), Korea ($1 billion), Singapore ($656 million), the United Kingdom ($621 million), Belgium ($603 million) and the Philippines ($496 million).

Gabrielle Gerbaud, director of DEED's Minnesota Trade Office said timing and the state's diverse product offerings helped Minnesota mitigate the impact of U.S. trade tariffs and retaliatory tariffs by several global trading partners.

The Trump administration issued the first U.S. trade tariffs in March 2018. But those tariffs and the retaliatory tariffs that followed from trading partners didn't take effect until summer.

That meant many other countries had time to boost product orders and "start hoarding" Minnesota-made products that were targeted by the trade tariffs, Gerbaud said.

By the fourth quarter of 2018, another phenomenon kicked in, she said.

After U.S. tariffs hit, Mexico cut its cereal orders from Minnesota by roughly 30 percent. But at the same time, Mexican companies, increased orders for Minnesota-made plastics, ash and ore products, which were not on the targeted tariff list, Gerbaud said.

"We have a huge diverse economy," and as a result, Minnesota fared much better than Michigan and some other states that relied on just a few export products like cars.

Gerbaud warned that Minnesota is not out of the woods.

Unless the United States finalizes trade agreements with China and with Canada and Mexico via the replacement of the North American Free Trade Agreement, "we will see some [negative trade] changes in 2019, probably by the second half of the year.