Trump has repeatedly argued the United States must renounce free trade to protect the manufacturing industry. He justified junking the Trans-Pacific Partnership that former President Barack Obama negotiated with 11 Asian nations by labeling it a “mortal threat to American manufacturing.” Trump has framed his opposition to NAFTA in similar terms. Though this tilt toward protectionism worries some manufacturing firms invested in international markets and global supply chains, it also finds substantial support among those primarily concerned about limiting foreign imports.
Service providers, on the other hand, more uniformly prioritize opening foreign markets. The Coalition of Service Industries, a trade association, strongly supported the TPP. Christine Bliss, the coalition’s president, told me service firms worry that with Trump rejecting TPP, Asian nations will negotiate their own free-trade deals that lock out American firms. And while service industries are encouraged that Trump is pressing China on stealing intellectual property, the association is warily watching his administration’s effort to renegotiate NAFTA. While Trump is threatening to withdraw, service industries “have seen tremendous benefits from the existing NAFTA agreement,” Bliss said.
These contrasting perspectives deepen the central geographic fault line in American politics. Trump won by amassing enormous margins in mid-sized and smaller metros, as well as rural areas, while facing overwhelming rejection in the largest urban centers nationwide. In office, Trump has hardened that division with an agenda that often directly opposes the interests of large cities on issues from immigration to policing to taxes.
Trade adds another wedge to that split. Many large metropolitan areas remain manufacturing powerhouses. But overall they are transitioning much more rapidly than smaller places are toward the post-industrial economy.
According to the MPP data, the 100 largest areas account for 69 percent of all exports, but an overwhelming 84 percent of service exports. The smaller areas, by contrast, supply 40 percent of manufacturing and commodity exports, more than double their share in services.
The difference reflects the concentration of many of the most attractive services in bigger urban hubs: gold-plated, higher-education institutions, medical facilities, and tourism, all of which count as exports when they attract foreign consumers; high-end legal, professional, and business services; and entertainment and technology products. “We are on a pretty significant industrial transition that, of course, has been happening for decades, but in our big cities it has been accelerating,” said Joseph Parilla, an MPP fellow who led the study.
Even mid-sized cities are effectively exporting some top-shelf services. Portland brings together architectural, engineering, and legal firms to sell foreign cities integrated environmental-sustainability plans. Milwaukee has developed an expertise in water management that combines sophisticated guidance on redesigning roofs, roads, and wastewater systems with products like advanced water meters. (In November, a consortium of Milwaukee companies called the Water Council is presenting comprehensive water-management plans to local governments in Beijing and Nanjing.) “It is an asset for us to be able to say ‘Here is … a one-stop shop that can provide every angle of what you are looking for,’” said Dean Amhaus, the council’s president and CEO.