Chemicals, transportation equipment, computers and electronic products make up the largest component of U.S. sales to the EU. It is no surprise that states whose exports constitute a large share of these products are likely to be most affected by the EU crisis. So which states are most vulnerable? Utah, South Carolina, Louisiana, Indiana, and Washington fill the top five - as these are the leading exporters of various commodities and auto and aviation products.
Roughly speaking, Utah's and South Carolina's exports to the EU comprise 4.2 and 3.5 percent of their state's gross domestic product (GDP), respectively. As a benchmark, U.S. exports to the EU represent less than 2.0 percent of GDP. What in particular do Utah and South Carolina sell?
Utah is a big gold mining state, and the EU is a large importer of its gold and silver commodities.
Similarly, South Carolina's auto production cluster has significant ties to the EU economy, with big players like BMW and Michelin. Many U.S. auto makers, including Ford and GM, have already witnessed declines in sales from the EU.
Utah's and South Carolina's shares of exports to the EU declined in dramatic fashion between 2010 and 2011 -- plummeting by 9 and 7 percent, respectively. MichiganaEUR(TM)s share of exports to the EU took the highest tumble, at 13 percent.
In California, computer and electronics represent nearly a third (or 29%) of all California's exports to the EU, but only 16% of the stateaEUR(TM)s exports head to the EU to begin with. That represents less than 1.5 percent of California GDP. However, California's export growth has been largely tied to growth in emerging countries. And because the BRICs acquire a large portion of their financing with European banks, California's growth is indirectly exposed and is likely to experience a slowdown in exports.
So while exports on a national level arenaEUR(TM)t as dependent on the EU as they once were, its indirect impacts, namely experienced through a further slowdown in emerging nations, like China could present more challenges for U.S. states. Perhaps now is the best time for our congressional leaders to rethink some of our export strategies. The good news is that the U.S. has made strides in reducing our trade barriers Trade Barriers, but there is plenty more the nation can capitalize on, such as modernizing exports controls on commercially available technology products (outlined in the January 2010 Milken Institute study, Jobs for America This would allow U.S. firms access to new markets, producing higher export growth across the high-tech segments of the economy, areas where the U.S. already holds firm competitive advantages. Other advanced and NATO member nations have taken the lead in this particular area, taking away from U.S. market share.