FACT: Americans buy 11 tons of Ukrainian honey daily.

THE NUMBERS: Sample U.S. imports from Ukraine, 2023 –

Sunflower oil	31,262 tons
Honey	4,075 tons
Apple juice	123 million liters
Hockey sticks	173,000
Electric coffeemakers	176,000
Pig iron	1.1 million tons

 

WHAT THEY MEAN:

Here’s Jonathan Swift praising bees three centuries back: “We have chosen to fill our hives with honey and wax, thus furnishing mankind with the two noblest of things, which are sweetness and light.” And here’s Alisa Koverda, translator and apiary expert at the Ukrainian Agriculture Ministry, writing in the autumn of 2022:

“Ukraine’s honey business is one of the largest in the world. Sadly, as a result of the war, dozens of apiaries and beehives are being destroyed every week. In some cases, beekeepers are able to get some financial support from the government, but it is not enough. Yet, the beekeepers remain optimistic. They share everything they have: their honey, knowledge and optimistic spirit.”

Peacetime Ukraine is the world’s second-largest honey producer, home according to her article to 220,000 commercial beekeepers with 2.3 million colonies, and probably another 200,000 part-time unregistered part-timers. They sold 58,000 tons of honey abroad in 2021.  Their top customers were neighboring Poles and Germans; Americans ranked third at 5,953 tons, making Ukraine the fifth-largest U.S. overseas honey source.

Pulling back a bit, pre-war Ukraine’s exports combined a large agricultural trade, centered on wheat — the blue and yellow flag represents the sky and a grain field — sunflower oil and seeds, honey, and processed foods such as apple juice with heavy-industry products led by iron and steel. Altogether this made up about a third of Ukrainian GDP, or $68 billion of a $200 billion as of 2021.

Three years later, exporting is more important still — together with aid and remittances, foreign customers are Ukraine’s main source of hard currency, helping to finance the war effort, keep local fire and police services functioning, and supporting the living standards of civilian workers and families.  Markets abroad, though, are obviously now harder to reach.  Grains, metals, and vegetable oils are bulky and heavy goods requiring sophisticated logistics and safe sea lanes to move, but Ukraine’s eastern seaports are occupied, and the Dnipro river ports near the front are free but blocked. The national export total accordingly fell from 2021’s $68 billion to $44 billion in 2022, and continued to drop through the middle of 2023. Nonetheless, through military successes, logistical innovation, help from allies, and inventive diplomacy, Ukraine’s trade absorbed the shock, began a rebound in the second half of 2023, and is now rising again.

At the core of this revival is a remarkable naval achievement. Without capital ships of its own, Ukraine has used drones, missiles, and intelligence to sink a third of the Russian Black Sea fleet’s 75 ships – the most recent example yesterday, the three-year-old 1600-ton patrol cruiser Sergey Kotov – and forced the rest to shelter out of range in the east. This has opened a “grain corridor” near the Romanian and Bulgarian coasts, allowing 23 million tons of exports to flow out of Odesa, Chornomorsk, and Pivdennyi in the second half of 2023. In February 2024, the Kyiv Independent reports 8 million tons. To the northwest, meanwhile, support from the European Union and aid programs run by the U.S. State Department and Agency for International Development have helped redirect some of Ukraine’s outbound trade through new road crossings and Danube river ports via Poland, Slovakia, and Romania. The Economy Ministry’s creative diplomacy, meanwhile, has worked out a waiver of Trump-era steel tariffs with the Biden administration, negotiated a free trade agreement with southern neighbor Turkiye, and used WTO rights and rules to battle occasional grain blockages at western-border transit points.

Altogether, having stabilized in 2023, Ukraine’s trade is now rising, with IMF projections suggesting 11% export growth this year, supporting in turn national GDP growth of 3.2%.  U.S. Census figures on arriving goods provide a set of human-scale examples. Some products — sunflower seeds and steel, for example – remain sharply down.  Apple juice and sunflower oil shipments, on the other hand, are now above their 2021 levels and accompanied by a steady flow of light manufactured goods: 176,000 electric coffeemakers, 132,500 pairs of skis (fourth in the world, behind Austria, China, and Bulgaria), 19,600 archery sets, and 173,000 hockey sticks (third, following China and Mexico).

Honey, too, is holding up, justifying the ‘optimistic spirit’ of late 2022.  Over the course of 2023, the U.S. Census reports 4,075 tons arriving (mainly in USDA’s ‘extra light amber’ grade), valued at $11 million. December’s arrivals included 74 tons in Chicago, 38 tons in Philadelphia, and 15 tons in New York. So in the third year of war, Ms. Koverda’s beekeepers continue to provide some sweetness and light to both overseas customers and locals, and along with these things an an example of resilience and hope.

FURTHER READING

From PPI:

PPI’s New Ukraine Project, directed by Kyiv-based Tamar Jacoby, has in-depth research and regular reporting on Ukrainian daily life, public mood, economic policy and anti-corruption progress, and more.

Budget and tax expert Ben Ritz explains the low cost, and high return, of military aid to Ukraine.

Diplomacy and policy:

The Ukrainian Embassy to the U.S.

Ukraine’s Commerce Ministry.

USAID’s agricultural support programs.

48 WTO delegations on economic and trade support for Ukraine.

View from the European Union.

Black Sea: 

English-language Kyiv Independent reports on the Black Sea grain corridor.

Radio Free Europe/Radio Liberty on Ukraine’s naval success and the retreat of Russia’s Black Sea Fleet.

… and follows up with yesterday’s sinking of the Sergey Kotov.

And Logistics Cluster reviews the status of Ukraine’s ports.

“Sweetness and light”:

Agricultural specialist and translator Alisa Koverda explains Ukraine’s beekeeping culture and wartime adaptation.

… and Фундація Жінок Пасічниць (Fundatsiya Zhinok Pasichnish’ for non-Cyrillic readers; translated, Foundation of Women Beekeepers), with honey contacts and beekeeping tips.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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FACT: African American owned businesses export over $1 billion worth of goods per year.

THE NUMBERS: African American owned exporting businesses* –

2021	1,139 exporters, $1.12 billion in exports
2020	1,001 exporters, $1.10 billion in exports
2019	1,514 exporters, $0.81 billion in exports
2018	1,400 exporters, $0.83 billion in exports
2017	1,200 exporters, $0.62 billion in exports

* Census/BEA, most recent data available

WHAT THEY MEAN:

Here’s President Biden a week before Christmas, talking up Milwaukee’s African American business community:

“Black small businesses with the talent, integrity, and ingenuity are the engines and the glue that hold communities together. … You’re the ones that sponsor the Little League teams. You’re the one that spon- — involved in the church events.  You’re the ones that hold the community together, and you keep it going.  You keep it moving. And every new business opening is a — is a vote for hope — just hope.  Hope.  You know, you’re making the American economy stronger and our nation more competitive.”

Biden’s enthusiastic remarks go on to report a lot of good news: the fastest growth in African American business formation since the 1990s; a doubling in the “share of Black households owning a business,” and a 60% rise in household wealth since 2019. Underneath these data are many stories — some of community collaboration, some of individual enterprise and inspiration, many of hard work, some of policy, many with some of each. Here’s one of the latter, in U.S. trade agencies’ effort to support African American exporting firms as they recover from a calamity:

Background: Each year since 2017, the Census and the Bureau of Economic Analysis have published a statistical picture of American exporting businesses. These include counts by size, race/ethnicity/gender of the owners, top markets and export earnings, employment, and payroll. These reports are labor-intensive projects requiring lots of detail work, and their data usually trail real-world events by three years. But they offer the most detailed description of exporting communities available anywhere in the world. The 2019 survey reports, for example, 1,514 African-American businesses selling over $800 million worth of goods to 60 countries — $43 million to China, $12 million to Ghana, $111 million to Canada, and so on. These (like exporters generally) are generally good employers. In 2021, they averaged 21 workers apiece, at a payroll of $64,600 per worker, whereas across the full list of ‘classifiable’ U.S. businesses — i.e., all privately-owned U.S. firms whose owners the Census and BEA could identify, exporters or not — the comparable averages were 11 workers at a payroll of $54,520 per employee.

COVID Impact: As we noted last summer, the COVID-19 pandemic hit this community very hard. By 2020, the Census/BEA count had fallen from 1,501 to 1,014 exporters — a 34% drop, seven times the 5% loss among all exporters, and well above the 8% of white-owned exporters and the 6% of Hispanic exporters. This is consistent with broader experience, as (for example) Federal Reserve economists reported that African American businesses closed at much higher rates than average in the spring of 2020. A closer look finds the number of medium-sized and large exporters — defined as businesses employing 100 workers or more — pretty stable; Census and BEA report 47 to 49 such businesses in 2019, 2020, and 2021, with exports between $200 million and $400 million per year.  Though there are some gaps in the data among smaller firms, the drop in their exporter total appears to be concentrated in small firms with fewer than 20 workers each.

Policy Since: Over the past three years, the government’s trade bureaucracy — Biden’s political appointees and civil servants at Secretary Raimondo’s Commerce Department, Reta Lewis’ Ex-Im Bank, and other agencies; career loan officers and regional export promotion specialists at 107 Commerce Department sites around the United States, U.S. Commercial Services officers at 146 overseas missions — have been trying to help the community repair the damage. A quick snapshot of one:

The Department of Commerce’s International Trade Administration’s Global Diversity Export Initiative creates an array of support programs ranging from webinars to high-level overseas missions: an on-line training session last Thursday for African-American businesses on opportunities and frequent challenges overseas; a South Africa mission for personal-care product manufactures this spring; eight “Bridges to Global Markets” events around the country for diverse companies hoping to find foreign customers this year, in the Mississippi Delta, Detroit, Los Angeles, Las Vegas, Atlanta, and other sites. Here’s GDEI lead Terri Batch, enthusiastically looking back at last year’s National Black Business Summit:

“We met with Black business owners from every corner of the country to promote ITA’s resources to support Black entrepreneurs – particularly those who haven’t previously engaged in international trade – discover new international markets for their products and services. During this event, I had the opportunity to moderate a Pan African Diaspora lunch panel that featured the services of the U.S. Commercial Service, Export-Import Bank of the United States (EXIM), the Minority Business Development Agency (MBDA), the U.S. Patent and Trademark Agency (USPTO), as well as entrepreneur and founder of Eminent Future, Isaac Barnes. This dynamic panel offered practical advice and support for black businesses pursuing business opportunities in Africa and beyond. Throughout the conference, we were also joined by speakers from other federal agencies including U.S. Department of State, the U.S. Census Bureau, and Prosper Africa. This whole-of-government approach to provide support for black-owned businesses to grow and scale into international markets is essential to carry out an inclusive and equitable economic agenda.”

And here are her Milwaukee colleagues, at work today a few miles west of Biden’s speech site and trying to help.  The data from BEA and Census are so far available only for 2021. But they do show an early rebound from the 1,001 exporters of 2020 to 1,139, and pretty substantial export growth, from the pre-Covid $806 million to more than $1 billion in 2021. All helping to underline and vindicate Biden’s Christmastime enthusiasm.

FURTHER READING

Biden in Milwaukee.

And his hosts at the Wisconsin Black Chamber of Commerce.

Government and policy:

The Commerce Department’s Global Diversity Export Initiative.

… DoC Assistant Secretary Arun Venkataraman explains the GDEI in Houston.

… Los Angeles-based ITA trade specialist Terri Batch reports from last summer’s National Black Business Summit.

… and reflects on her own public service for Commerce’s Black History Month observance last year.

Ex-Im Bank has options for African-American businesses hoping to begin exporting.

… and works with the Congressional Black Caucus on strategic planning.

And the Small Business Administration’s export center.

Data: 

From Census and BEA, the world’s best statistical portraits of exporting communities by ownership, markets, export value, employment and payroll from 2017 to 2021.

… and Census’ annual report on exporters and importers by large/medium/small size, known as “Profile of Importing and Exporting Companies,” with totals, state-by-state figures, and 25 overseas markets.

And for context, the New York Fed (2020) studies the disproportionate impact of the COVID-19 pandemic on African American business.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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FACT: American steel output lower in 2023 than in 2017; aluminum about the same as 2017.

THE NUMBERS: U.S. steel use* –

2023:	93 million tons
2022:	96.9 million tons
2021:	98.9 million tons
2012-2017 average:	100 million tons

* U.S. Geological Survey, annual ‘apparent consumption’’

WHAT THEY MEAN:

Six years later, how have Trump-era metals tariffs worked out? Did the U.S. wind up making more steel or aluminum? If so, did the tariffs damage metal-users like auto companies or machinery makers? And if so, how did they respond?  Some perspectives on these questions, drawn from the U.S. International Trade Commission’s modeling estimates along with recent data on metal output and consumption:

The Basics: In the first week of March 2018, the Trump administration decided to impose tariffs of 25% on most imported steel products, and of 10% on most imported aluminum. These were added on top of pre-existing tariffs, mostly in the range of 2% to 5.7% for aluminum and 0% to 3% for steel. (Note: The pre-2018 rates oversimplify, as many steel and some aluminum products also have additional “anti-dumping” and “countervailing duty” tariffs. See below for a bit more.) The legal basis was a little-used U.S. trade law clause — “Section 232” — dating to 1962, which authorizes presidents to indefinitely “adjust” imports on grounds of national security. The Department of Commerce, which administers this law, argued for limiting imports in two Jan. 2018 reports on the grounds that ready access to these metals has security implications and rising imports had cut U.S. output. The resulting tariffs have mostly stayed in place since, with changes such as the substitution of quotas for tariffs for Korea and the EU and exemptions for Canada and Mexico.

What has happened since? Abstract economic logic suggests that a large new tariff should create a four-phase chain of events something like this:

(i)    Tariffs raise prices for the relevant imported good, in this case the two metals.
(ii)    U.S. buyers — in this case, industries such as machinery and auto factories, construction firms, and canning industries — shift purchasing to local varieties.  Imports therefore fall and the “domestic” share rises.
(iii)    As “consumer” industries pay more for the good, they lose some competitiveness vis-à-vis imports at home and in export competition abroad, and therefore risk also losing some production and employment.
(iv)    They respond by trying, to the extent possible, to use less.

The Commerce Department’s 2018 reports admitted that phase (iv) was theoretically possible, but said it probably wouldn’t materialize in reality because strong GDP growth and higher federal spending on metal-using products would offset higher prices. Thus capacity utilization would rise, and U.S. mills and smelters would grow more stable and profitable. Here’s their steel prediction:

“By reducing import penetration rates to approximately 21 percent, U.S. industry would be able to operate at 80 percent of their capacity utilization. Achieving this level of capacity utilization based on the projected 2017 import levels will require reducing imports from 36 million metric tons to about 23 million metric tons. If a reduction in imports can be combined with an increase in domestic steel demand, as can be reasonably expected [with] rising economic growth rates combined with the increased military spending and infrastructure proposals that the Trump Administration has planned, then U.S. steel mills can be expected to reach a capacity utilization level of 80 percent or greater. This increase in U.S. capacity utilization will enable U.S. steel mills to increase operations significantly in the short-term and improve the financial viability of the industry over the long-term.

In sum, the administration’s hope and prediction was that the U.S. would be producing more metals, since the policy “would enable U.S. steel producers to operate at an 80 percent or better average annual capacity utilization rate based on available capacity in 2017.” The analogous goal for primary aluminum was a rise in production to 1.45 million tons, and of smelter capacity utilization to 80%.

Phase i: Imports Fall, 2018-2019: U.S. statistical agencies such as the Census and the U.S. Geological Survey publish regular data on metal trade, use, and production. The trade figures show that after the tariffs went on in early 2018, imports of metals did in fact drop. Steel imports fell from the 36 million tons mentioned in the Commerce report to 25 million tons in 2019, quite close to their 23-million-ton goal. Aluminum imports went down from 6.2 million tons in 2017 to 5.3 million tons in 2019. Both declines seem to have lasted, though with some volatility and fluctuation; 2023 imports were 25 million tons for steel and 4.8 million tons for aluminum.

Phases ii & ii: Metal Output Up But “Downstream” Industries Contract, 2020-2021: The U.S. International Trade Commission’s formal five-year report last March estimated that in 2020 and 2021, the tariffs had raised U.S. steel and aluminum output by about $2.2 billion, as compared with a hypothetical case in which the administration did not impose tariffs. Meanwhile, they cut the output of U.S. metal-using manufacturers (mainly machinery, auto parts, and tools and cutlery) by about $3.5 billion. So overall, ITC’s estimate was that between 2017 and 2021, the tariffs had increased the metals production relative to a no-tariff scenario, but left the overall U.S. manufacturing sector a bit smaller.

Phase iv?: Output and Metal Use/2023: No such formal estimate yet exists for 2022 and 2023. However, according to the U.S. Geological Survey’s annual “Mineral Commodity Surveys”, by 2023 Americans were using less steel and aluminum than they had before 2018. These reports show that from 2012 to 2017, the U.S. economy used an average of 100 million tons of steel and 5.23 million tons of aluminum per year. (Using USGS’ “apparent consumption” metric.) The 2023 U.S. economy, though about 10% bigger in constant, inflation-adjusted dollars than that of 2017, used only 93 million tons of steel and 4 million tons of aluminum — respectively 7% less and 20% less than before. Put another way, where in 2017 the U.S.’ $20.2 trillion GDP used on average 5100 tons of steel and 290 tons of aluminum per real $1 billion in output, the $22.4 trillion 2023 economy needed only 4,156 tons of steel and 179 tons of aluminum per $1 billion.

Thus, though imports remain close to the levels the Commerce Department’s 2018 reports envisioned, U.S. metal production has fallen back to pre-tariff levels. According to USGS, steel mills poured out 81.6 million tons of metal in pre-tariff 2017, and got up to 87.8 million tons in 2019.  In 2022, though, they were back to 80.5 million tons; in 2023, a slightly lower 80.0 million.  Primary aluminum smelters likewise, having raised output from 741,000 tons in 2017 to 1.09 million tons in 2019, had fallen back down to 750,000 tons in 2023. Nor did the Department’s prediction of higher capacity utilization prove realistic. The Federal Reserve’s “FRED” statistical service reports 74.2% in 2023, statistically about the same as 2017’s 73.6%. And actual capacity is down from 111 million to 104 million tons in steel, and from 2 million to 1.36 million tons in aluminum.

Analysis of this should be a little cautious, as metal use (especially in aluminum) can be volatile. But it’s unusual to see a sustained decline in use during periods of strong economic growth like that of 2021-2023. And it may be that (setting aside international reactions and retaliations, and impacts on metal users like the auto parts and machinery factories) we are now in Phase (iv), and the tariffs’ main current effect is “lower use of metals.” Not really what the DoC was advertising six years ago.

FURTHER READING

Analysis:

USITC analysis and estimates of the ‘232’ tariffs (see pp. 124-133).

Academics Kadee Russ & Lydia Cox forecast in February 2018 that metals tariffs could raise metal output, but likely at the cost of jobs and production in other manufacturing industries.

… and they look back from 2021.

Data: 

FRED (“Federal Reserve Economic Data”) has steel capacity utilization trends from 1970 forward.

The U.S. Geological Survey’s mineral commodity statistics have annual reports on steel and aluminum output,  imports and exports, capacity, and employment back to the early 1990s.

… and for real enthusiasts, a spreadsheet with data back to 1900.

And references:

The “Section 232” site for the Commerce Department’s Bureau of Industry and Security, with links to the 2018 reports on steel and aluminum.

… or direct to the 2018 steel report.

… and the 2018 aluminum report.

And some tariff explanation:

Steel and aluminum typically have “MFN” tariffs in ranges from 2% to 5.7% for aluminum and from 0% to 3% for steel. Real-world policy is complex, though, as steel in particular is often also covered by “anti-dumping” and “countervailing duty” tariff penalties outside the regular tariff schedule. The Commerce Department reports that of the 685 AD and CVD “orders” currently in place, 309 cover steel and steel products, and a more modest 32 cover aluminum.

Here’s the U.S. tariff schedule, with steel in Chapters 72 and 73, and aluminum in Chapter 76.

And the Department of Commerce’s tally of AD and CVD “orders” by country, industry, date, and product.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.