CHICAGO, June 15 (Reuters) - A drop in U.S. export growth due to a slowdown in China’s economy would likely dent tax revenue in several states that send agricultural commodities and transportation goods to the country, Fitch Ratings said on Friday.
The two countries were heading toward a trade war after the Trump administration moved ahead with hefty tariffs on $50 billion of Chinese imports and China officials vowed to retaliate.
Fitch said soybean exports would be particularly impacted by a sluggish Chinese economy, noting that two-thirds of Iowa’s soybean exports, which totaled $3.1 billion in 2016, went to that country.
Other big soybean exporters include Illinois, where soybeans accounted for about $2 billion of the state’s $5.2 billion of 2016 exports to China, as well as Minnesota. But the credit rating agency said those two states have large and diverse economies that are not as dependent on agricultural exports as Iowa.
The state of Washington would face the biggest exposure in terms of the export of vehicles and vehicle parts.
“The state’s exports to China were 2.2 percent of state gross domestic product in 2016, or $11.7 billion, and heavily concentrated with aerospace products and parts accounting for $8.8 billion of this amount,” Fitch said in a report.
Reporting by Karen Pierog in Chicago Editing by Matthew Lewis