Minnesota exports growing at a slower rate than earlier in year

Minnesota factory and farm exports rose this fall, but at a slower rate than earlier in the year as a high U.S. dollar and an escalating trade war with China have put pressure on companies doing international business.

Medical goods, machinery, electrical and plastic products saw the highest demand as the state's exports totaled $5.7 billion during the third quarter, up 6.5 percent over last year.

Still, Minnesota's trade did not match the national average increase of 8.1 percent for the quarter ended Sept. 30 or the 15 percent growth seen in the second quarter.

"We are still pleased to see growth," said Minnesota Chamber of Commerce President Doug Loon. "But I think the uncertainty around trade policies and the disruption of the U.S. supply chain can be one part of the reason for that [export] slowdown. We need to be aware that the rate of growth is not what we are used to seeing."

Arden Hills-based packaging-machine maker Delkor Systems said it is being hurt this year by unfavorable currency translations, which tend to make U.S. products more expensive overseas.

Delkor's exports are down for the year. It received its first order of the entire year from Canada just two weeks ago.

"I was kind of shocked by that," said Dan Altman, the company's vice president for sales. "I think the dollar has hurt us in Canada and Mexico."

Still, Minnesota officials said they were not disappointed by the quarter's results.

"Many of the state's core industries continue to experience strong export growth," said Shawntera Hardy, commissioner of the Minnesota Department of Employment and Economic Development. "Minnesota businesses are also succeeding at making inroads into newer emerging markets."

Canada remained Minnesota's largest trading partner with sales rising 5 percent to $1.2 billion during the quarter.

Exports to China grew 9 percent to $671 million, while sales to Mexico slid 7 percent to $610 million.

Japan ($406 million) and Germany ($282 million) were the fourth and fifth largest buyers of the state's exports.

Some, like Creighton University economist Ernie Goss, have predicted that U.S. export activity will slow unless new trade talks and policies are formed that quell the impact of U.S. trade tariffs and retaliatory moves from other nations.

One of the most visible effects of the protective tariffs is on the soybean industry. China was the most reliable market for U.S. soybean farmers, and soybeans were the state's top export crop, with $2.1 billion worth of business overseas. Now, the tariff war with China has driven the purchase price for soybeans below the break-even point of $9 a bushel.

Manufacturers, farmers and economists all say there are likely to be more repercussions from the trade wars.

Loon said the key for Minnesota companies is to find new markets.