Arlington, VA

Morning Notes

Arts Group Pushing for New Venue — “As part of its recently adopted strategic plan, [Embracing Arlington Arts] plans to use the coming three years to build community support for a performing-arts venue that would include a black-box theater and ancillary classroom and office space. Efforts would also be made to identify a site and start raising funds.” [InsideNova]

APS Changing Student Camera Policy — “In response to challenges teachers are experiencing engaging students with cameras off, we have adapted our policy regarding the use of cameras during instruction time, based on input we have received from teachers, staff, parents, the Distance Learning Task Force, and advisory committee members. We are asking teachers to encourage students to turn on their cameras during synchronous instruction and while directly engaging with peers and staff.” [Arlington Public Schools]

Spotlight on Arlington Man’s Heroism — “A must read about Arlington’s Paris Davis, the former publisher of VA’s Metro Herald. His heroism in 1965, while commanding a Special Forces team in Vietnam, seems worthy of the Medal of Honor. But those who served with him say the Pentagon kept losing the paperwork.” [New York Times, Twitter]

Local Nonprofit’s Work Highlighted — “Mohammad Ahmed, 30, gave up working as an Uber driver in March for fear of infecting his wife, 3-year-old son and two elderly parents who live with him. When he couldn’t pay the rent or electric bill for their two-bedroom apartment in Arlington, a local charity funded mainly by taxpayer dollars stepped in.” [Washington Post]

Metro Reducing Rail Service — “Metro this week began reducing Metrorail service during peak commuting hours because of low usage while saying it will boost Metrobus service as new commuting trends emerge during the coronavirus pandemic. The transit agency referred to the changes as a way to ‘normalize’ rail service.” [Washington Post]

Local Economy Expected to Grow — “Greater Washington’s economy will rebound in 2021 as Covid-19 vaccinations become more common and the weather warms up, according to a new regional economic forecast released Friday. That means 3.5% growth in the gross regional product in 2021, a sharp rebound from the 2.9% drop in 2020. But the region will only see a full recovery in 2022, with 4.1% projected growth in the local economy.” [Washington Business Journal]

Many Office Workers Will Stay Remote — “Working in D.C. will continue to look different for the greater part of this year due to the coronavirus, a new study shows. Employers expect less than a third of their employees to physically be in the office in the first quarter of this year, but by the fall, they expect 75% of their staff to be back, according to a study.” [NBC 4, Washingtonian]

Flickr pool photo by GM and MB

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The pandemic has dealt a blow to Arlington’s economy, but the county may be well-positioned for a rebound rather quickly.

In a virtual panel discussion hosted by the Arlington Committee of 100 — the second of a two part series — local experts said that unlike past downturns that resulted in a lengthy recovery, this one is driven not by structural economic factors but by a virus.

As people are vaccinated and the pandemic recedes — whenever that may happen — expect a strong recovery.

“The economy right now is reacting to the health crisis and [that] is driving the recession,” said Jeanette Chapman, economist and director of the Stephen Fuller Institute at George Mason University. “This is not a normal recession.”

Due to the pandemic, consumer spending dropped significantly. Compared to this time last year, credit and debit card spending is down nearly a quarter in Arlington (less than D.C. comparably, which is down nearly 30%).

However, that is an improvement from early spring when spending overall was down about 50%.

As expected, the drop in spending was mostly concentrated in the transportation, apparel, hotel, and food service sectors. Grocery and food spending rose in 2020.

While job losses continues to be a concern, the Northern Virginia region is above the national average. Chapman says this is due to “mostly being a knowledge services economy and can send a bulk of workers home [to telework].” A big chunk of the job losses, as expected, are in the leisure and hospitality sector, accounting for nearly a third from November 2019 to November 2020.

“Leisure and hospitality jobs tend to have lower wage scales,” says Chapman. “Those jobs are hardest hit.”

In general, says Chapman, the losses regionally are skewed toward lower wage jobs. However, because this recession is due to a health crisis, Chapman says we can expect a near full recovery by 2022 due to the widespread availability of a vaccine.

Arlington’s small businesses, particularly those dependent on in-person interaction, are also being significantly impacted.

Telly Tucker, director of Arlington Economic Development, said that any business with fewer than 50 employees is defined as a “small business.” This encompasses about 90%, or 6,000, of the county’s businesses.

Over the last ten months, the county and the Commonwealth have implemented a variety of programs and grants. And it does seem to be helping, said Tucker.

Arlington’s small business emergency grant provided nearly 400 businesses with a combined $2.7 million. More than half of those businesses were woman and/or minority-owned.

As for bigger businesses, Tucker also spoke about how office building vacancy rates actually were decreasing going into 2020 from a high of over 20% in 2015.

While the vacancy rate has since risen and now sits at 16.3%, that remains below the office vacancy rates of the mid-2010s. Commercial real estate like office buildings are a major source of tax revenue for the county, Tucker noted.

What’s more, a number of large, multinational companies have made a home in Arlington over the last five years. This includes Microsoft, which made the announcement just last week that it would have a significant presence in Rosslyn.

The presence of Amazon and other major companies is likely to spur more job growth in Arlington, as is an expected rise in federal spending under the Biden administration.

The Arlington housing market, meanwhile, is doing well. Homes are typically selling for between 3% to 5% over listing price, noted Tucker, which is a positive sign.

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(Updated at 3:40 p.m.) Many businesses have been forced to shift their expectations and approaches this year, and Kinder Haus Toys in Clarendon is no exception.

The toy store, located at 1220 N. Fillmore Street, already faced the test of keeping up with online competition before the pandemic. Its business challenges were exacerbated by the pandemic and state mandates that required the store to temporarily close earlier in the year.

But Kinder Haus has begun to return back to normal, albeit with stringent COVID-19 safety precautions. The store implements social distancing, has hand sanitizers ready, requires customers and employees to wear masks, and has installed a sneeze guard at the register.

Owner Sue Pyatt and the store’s employees have made the adjustments in stride, and it’s starting to pay off.

“It’s getting better. Little by little, week by week, we’re seeing an improvement in sales,” Pyatt said. “And that’s very encouraging.”

Once the store reopened, sales initially shifted to curbside service, online advertisements were heavily utilized, and Pyatt leaned on the business drummed up by an email newsletter.

Though some things have changed, others have stayed the same. The store’s focus has remained on some essentials Pyatt feels are synonymous with small independent business, such as offering free gift wrapping and the “knowledgeable suggestions” from the staff.

“We have a number of loyal customers, and they were so pleased we were open,” Pyatt said. “And they had such nice things to say, such as, ‘It gives us hope that you’re continuing,’ and ‘We appreciate being able to have a store like this that we can turn to when we need gifts for children,’ and things along that line.”

Kinder Haus has managed to maintain its normal hours since it reopened, and according to Pyatt has been able to meet its expenses and ensure payroll was consistently met for employees.

Though the store is open and business is slowly getting better, there have been some additional cuts due to safety measures. The store’s regular events like Tunes 4 Tots music class, arts and crafts activities, Lego Play Day, and others have been suspended until further notice, for instance.

Pyatt hopes to be able to offer the activities again “as soon as we feel it’s safe.”

The store has been able to maintain its charitable efforts with the help of the “very generous community that we’re blessed to be in,” Pyatt said.

The store maintains a donation box to support the Arlington Food Assistance Center and continues to provide support to the Educate the Girls organization that provides financial assistance to girls in rural Uganda to attend primary or secondary school.

“I’d just like to say how much we appreciate our customers and more than anything, it’s the customers and the support we’ve received from them that has made it possible for us to continue and give us the encouragement that we needed,” Pyatt said. “That words that occur to me are kind of cliché, but we’re all in this together. Our staff, our wonderful customers, we’re all in this doing the best we can. And I think that’s why it works.”

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Arlington businessman Xavier Warren is basing his campaign for lieutenant governor of Virginia on a pledge to lead a statewide economic recovery while focusing on the job market.

Warren is a partner with Congressional Partners, a bipartisan organization that helps nonprofits and corporations secure federal grants. He also works as a sports agent and serves as a NFL Players Association contract advisor.

Warren announced his candidacy for lieutenant governor in September.

He is among a sizable group of candidates vying for the Democratic Party’s nomination for lieutenant governor that includes Del. Elizabeth R. Guzmán (Prince William), Del. Hala Ayala (Prince William), former Democratic Party chairman Paul Goldman, and Fairfax County NAACP President Sean Perryman.

Additionally, Del. Sam Rasoul (Roanoke) filed paperwork Tuesday to allow him to start raising money for a potential lieutenant governor campaign, according to the Washington Post.

Republican candidates include former Del. Timothy D. Hugo (Fairfax), Del. Glenn R. Davis Jr. (Virginia Beach), Fairfax County business consultant Puneet Ahluwalia and Lance Allen, a national security company executive from Fauquier County.

Each candidate is vying for the role that will be vacated by Lt. Gov. Justin Fairfax (D), who is running for governor.

Warren points to the state’s current economic condition as his primary reason for running. He specifically seeks to address the unemployment rate that has risen as a result of COVID-19.

“The reason why I am running is to focus on jobs, support small businesses and workers, and helping every Virginian have a job with a livable wage,” Warren said.

“COVID is literally hurting, and has killed, small businesses,” he told ARLnow. “Small businesses are closing on a weekly basis. And hundreds of thousands of people are out of work. Even truthfully speaking, people were hurting pre-COVID, living paycheck-to-paycheck, and now those people are extremely hurt.”

His understanding of the lieutenant governor job is as a “business position” that sets the basis for a platform focused on reviving the job market. If elected, Warren looks to advocate for job growth while working with boards such as the Virginia Economic Development Partnership, Virginia Tourism and Virginia Resiliency.

“What I plan to do is to be our spokesperson and really market Virginia for jobs to come in, to bring in high-wage jobs, new jobs, and that will also support small businesses,” Warren said. “When you put money into workers’ pockets, they then go spend it in retail, go spend it in restaurants, spend it at shopping centers.”

Warren lives in Arlington, but he grew up in Danville and attended Hampton University before earning a master’s degree from Georgetown University. With his experience living and working across the state, he acknowledges that each region of Virginia comes with its own unique challenges.

His plans for the position include tailoring the economic efforts for each region based on its specific needs, whether that’s improved health care, education, supporting public schools, or whatever each community may face.

“Obviously, at the state level, economic development is different across the board,” Warren said. “Every person in every region is unique. So it’s not a one-size-fits-all for everyone. You take in a personalized approach to helping get each region together to really uplift all Virginians.”

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Sponsored by Monday Properties and written by ARLnow, StartupMonday is a weekly column that profiles Arlington-based startups and their founders, plus other local technology happenings. Monday Properties is proudly featuring Shirlington Gateway. Say hello to the new 2800 Shirlington, which recently delivered a brand-new lobby and upgraded fitness center. Experience a prime location and enjoy being steps from Shirlington Village, a large retail hub with a variety of unique restaurants and shopping options. Spec suites with bright open plans and modern finishes are under construction and will deliver soon!

There were 31 Arlington-based companies included in Inc. Magazine’s annual list of America’s 5,000 fastest-growing private companies.

In all, 204 Northern Virginia companies made the list. According to Inc., these companies saw a median 3-year growth of 162%, generated $12 billion in total revenue and added 16,118 jobs.

The highest ranked Arlington company was Royce Geospatial Consultants, a geospatial intelligence government contractor based out of Clarendon.

“Our experts leverage the harvesting and combination of a variety of datasets,” the company says on its website, “to include emerging open and dark web data with foundational geospatial data to provide true value added Intelligence and GIS data resources used for deeper analysis.”

Other Arlington companies on the list include transportation and defense contractor Objective Area Solutions, biometric identification company Secure Planet Inc., medical data and records contractor Capitol Bridge.

“We are a growing, Arlington-based company that exclusively focuses on public sector aviation programs and we have developed a reputation for being able to quickly respond to our client’s dynamic environment,” said J.J. Stakem, CEO of Objective Area Solutions. “The complexity of these aviation programs in areas such as drones, cybersecurity, environmental programs, surveillance, and many other areas requires consulting companies to have a highly specialized understanding of the technical, organizational, operational, and policy considerations.  OAS uniquely fills that need for our clients.”

Stakem said the company has worked to support the Department of Defense, the Federal Aviation Administration, and NASA.

“Moving forward we will be continuing our work to provide holistic support to public sector aviation programs,” Stakem said. “Over the next 12 months we are focused on growing our engineering support capabilities as a component of our overall solution and we are also expanding our client base to include a wider range of aviation clients within the US Government as well as state, local, and international public sector aviation domain.”

Courthouse startup DivvyCloud also made the list at number 471 with 970% growth. The company said in a press release that its recent acquisition by cybersecurity company Rapid7 meant it was the last year the company would be eligible for the list.

“My co-founder, Chris DeRamus, and I are honored to be included on this prestigious list and ranked among the most innovative and forward thinking companies shaping our nation today,” said Brian Johnson, co-founder and senior vice president of DivvyCloud. “This announcement further validates that we are fulfilling our mission to help enterprises accelerate innovation without loss of control.”

The following list includes the Arlington companies, their ranking on the Inc. list, and their 3-year growth rate.

Photo courtesy DivvyCloud. Vernon Miles contributed to this story.

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A thousand down, 24,000 still to go.

Amazon announced today that it has hired its 1,000th HQ2 employee, though its physical offices in Arlington remain closed due to the pandemic. The tech and retail giant also announced that it still plans to ultimately fill 25,000 positions at its second headquarters, potentially putting to rest speculation that HQ2 could be downsized amid a work-from-home trend.

In a post on its Day One blog, Amazon said that it was working to hire a diverse workforce in Arlington:

Amazon remains committed to filling the 25,000 roles projected for HQ2 with diverse talent from across the region. Although offices have been quiet for the past several weeks due to COVID-19, our hiring has continued as planned. We have virtually onboarded scores of talented people and recently welcomed our 1,000th employee in Arlington. Among our new hires are lifelong Northern Virginia resident Lakshmi Kopparam, one of the first software development engineers to join the Amazon Fire TV team in Arlington, and McCoy Jamison, who formerly served in the U.S. Navy and just began his role as a solutions architect with Amazon Web Services. Kopparam and Jamison are working alongside a group of senior engineers who are building a best-in-class technology culture at Amazon and contributing to the region’s growing tech ecosystem. Within the first wave of hires is a program lead who has been tasked with ensuring our HQ2 workforce is inclusive and diverse. This person will implement recruiting and HR best practices and initiatives designed to ensure inclusiveness in our products and offerings.

The blog post also detailed the millions in donations Amazon has been funneling to education, food, and relief initiatives in Arlington, D.C. and other parts of Virginia.

Construction is currently underway on the first phase of Amazon’s permanent HQ2 along S. Eads Street in Pentagon City. The 2.1 million square foot complex is expected to open in 2023 and house about half of HQ2’s 25,000 employees. Until it opens, Amazon is working out of temporary, leased space in Crystal City.

A planned second phase will build another 2.1 million square feet of office space across 12th Street S., in the vacant PenPlace lot. In the meantime, the new Amazon-funded design for nearby Metropolitan Park is being finalized, ahead of expected County Board approval this fall.

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Arlington has the highest proportion of residents who can work from home in the U.S., according to a new study.

That’s according to financial website SmartAsset, which ranked the 200 largest U.S. cities by the estimated percentage of the workforce that can work remotely.

“A large percentage of the workforce in Arlington, Virginia is involved in two white-collar occupations: management, business & financial operations and professional & related job,” SmartAsset wrote. “According to [Bureau of Labor Statistics] data, 60% of management, business & financial operations workers and more than 42% of all professional & related workers can work from home, so many Arlington workers have that ability. We estimated that 39.23% of the total Arlington, Virginia workforce can work from home, the highest percentage for this metric across the 200 largest U.S. cities.”

That could be an underestimate. A recent ARLnow poll, though unscientific, found that 80% of respondents reported working at home (of given leave) with full pay.

Arlington was No. 1 in SmartAsset’s rankings, with Frisco, Texas; Bellevue, Washington; Irvine, California; and Washington, D.C. rounding out the top 5. Neighboring Alexandria ranked No. 14.

If much of the Arlington population is working from home and still getting paid during the current crisis, that’s good news for the local economy, suggesting a swifter return of consumer spending once stay-at-home orders are relaxed. Also good news: last month SmartAsset ranked Arlington among the most recession-resistant places in the U.S.

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We already knew from experts that Arlington would likely dodge a bullet, relatively speaking, during the next recession. But it’s good to hear some reinforcement of that on a day that the stock market is down nearly 5%.

At one point today, amid coronavirus fears and plummeting oil prices, the Dow was down more than 2,000 points. Trading was halted for 15 minutes due to the massive drop.

On the bright side, Arlington — thanks to its large federal and military employment base, and professional services sector that’s more able to work from home — is better positioned than most to weather a pandemic-induced recession.

None of those factors went into the new rankings from the website SmartAsset, however.

SmartAsset looked at factors related to employment, housing, and social assistance in ranking Arlington County No. 15 on its list, behind #1 Frisco, Texas, among other mostly smaller cities. Our neighbor to the south, Alexandria was No. 23, on the list.

“The Great Recession wreaked havoc on the U.S. economy, with unemployment peaking at 10.1% in October 2009,” a SmartAsset spokesperson said, in introducing the rankings. “Not all cities, however, were hit equally by this economic crisis and some are better equipped to weather the next downturn.”

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Morning Notes

HQ2 Business Boom Strains County — “A full year after Amazon.com Inc. announced that it would set up shop in Arlington, there’s little doubt the company has drawn the sort of surge in business and development interest that local leaders promised as they pursued HQ2 — but all of that activity has also put a strain on the local government as it prepares for the tech giant’s arrival.” [Washington Business Journal]

Tour of Amazon’s Temporary Crystal City Office — “Amazon almost has 200 employees working in leased space in @ArlingtonVA, with more on the way.” [WJLA, Twitter]

‘National Landing’ Name Falls Flat — “It’s been one year since the HQ2 announcement, and with it the coordinated airdrop of the name, ‘National Landing,’ on an unsuspecting and bewildered population… So has National Landing stuck? Not really, at least among the common people, according to the folks I interviewed.” [Washington Business Journal]

Amazon Adjacent Real Estate Skyrockets — “The median home price in the 22202 ZIP code, which encompasses all of HQ2, was $815,000 in October. That’s about a 51% year-to-date increase or a $275,000 difference, according to data provided by MarketStats by ShowingTime, based on listing activity from Bright MLS.” [Washington Business Journal, WTOP]

Housing Affordability Increasing? — “With mortgage rates at a three-year low and a healthy job market, housing affordability rose to its highest level in three years in the third quarter of 2019… for the Washington area, high incomes helped to offset the pricey cost of housing, with the resulting regional opportunity index higher than the national average.” [InsideNova]

County Pleased With Water Main Break Response — “How well did Arlington County in Virginia think it handled the water main break that triggered a boil water advisory for more than 100,000 customers in the county and parts of Northwest D.C.? Pretty well, it seems.” [WTOP]

New American Legion Bridge Coming — “Commuters heading to and from Maryland on the Beltway may see some relief from the constant traffic woes. The governors of Virginia and Maryland announced an agreement Tuesday morning that would see the construction of a new American Legion Bridge.” [Tysons Reporter]

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As some indicators point toward another recession around the corner, local economists say Arlington would likely escape the brunt of a downturn.

The recession that kicked off after the country’s housing market collapsed in 2008 devastated communities and families nationwide. But experts say Arlington’s proximity to jobs and contracts from the federal government helped protect the county, and its growing business sector today may also help shield it from future recessions.

How the Great Recession Hit Arlington 

Alex Iams, the Interim Director of Arlington Economic Development (AED), said when it came to the last recession, Arlington was “the last in and the first out.”

“In the last recession Arlington fared pretty well from what I can see,” agreed George Morgan, a finance professor at Virginia Tech, in an interview. “It’s not to say that everything was rosy, but compared to other parts of the country, Arlington didn’t do so badly.”

“At least a third of the [local] economy originates with federal payroll or federal procurement spending or other government spending,” said Stephen Fuller, the high-profile professor of public policy and regional development at George Mason University, when asked what helped cushion Arlington during the collapse.

However, Morgan noted that office and multi-family developments saw “pretty dramatic effects” from the recession as he said some companies’ cash-flows dried up and projects were put on pause. That affected those in the real estate development and construction industries.

Morgan also noted that the education and medical sector were hit harder in Arlington than in other parts of the country, but also rebounded faster in the last 10 years. “That’s a big plus if that happens again,” he said of future recessions.

Both economists agreed that lower-wage jobs were hit hardest by the Great Recession. By 2011, the county’s largest food bank reported a record-breaking number of families seeking help.

“In the low wage industries, Arlington basically looks the same as the rest of the country,” said Morgan, of Arlington around that time. “That was not a pretty picture.”

But Fuller and AED director Iams argued that the economic impact on the county of losing 35,000 jobs through federal sequestration was greater. “Base realignment and closure was really our recession,” said Iams.

How Next Recession May Affect Arlington

While predicting economic downturns can be fraught, Iams and the professors agreed the country is prepared if another one happens soon.

“In Arlington, they’re not seeing the signs of [a] recession that you’re seeing it elsewhere,” said Morgan. “It maybe be that Arlington kind of dodges a bullet if there is a next recession.”

The damage the county would sustain would depend on what exactly would cause the next recession.

“If it’s the trade war that causes it, retail will probably suffer,” said Morgan. “But with the Arlington economy being so insulated from trade, I think if that’s the cause of a recession then the Arlington economy will still do well.”

Fuller explained that “anything that is discretionary begins to take a hit,” including elective purchases like cosmetic surgery, luxury fashion, tourism, and restaurants.

But the professors pointed out that many higher-wage industries — like cybersecurity, which is growing across the D.C. area — can actually weather recessions quite well. Morgan cited an Urban Institute report show that the county has a large share of high-paying jobs from business service companies like Deloitte and government contracting jobs via the Department of Defense.

How Amazon Would Impact a Recession

Iams noted that the county has since 2008 added even more corporate jobs as companies like Lidl, Nestle, and Amazon moved into town.

When it comes to Amazon’s massive planned headquarters, the officials said it’s another potential insulator for the county against future recessions by virtue of the 25,000 people it has pledged to hire — and the others businesses and universities its presence attracts to Arlington.

“They know that Amazon burns workers out after 4-5 years, and they’re still software engineers, so they’ll look around for other, similar-type jobs,” said Fuller. “Amazon is going to make Arlington the epicenter of the talent pool.”

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Amid trade-related tweets from President Donald Trump that roiled the stock market, Virginia’s U.S. senators are speaking out against escalations in the trade war with China.

Sens. Mark Warner and Tim Kaine, both Democrats, said in a joint statement that the Virginia and the U.S. economies are at risk as Trump raises tariffs and tweets invective.

The senators’ offices released the following press release Friday afternoon.

U.S. Sens. Mark R. Warner and Tim Kaine (both D-VA) released the following statement after China announced that it will instate additional retaliatory tariffs starting September 1 in response to President Trump’s plans to impose additional levies on Chinese goods:

“Time and time again, we have warned President Trump against escalating a trade war with China. Trade wars yield no winners and hurt consumers and producers all over the Commonwealth, especially the farmers and small business owners who count on Chinese demand for products grown in Virginia. We’re even seeing devastating second-order effects of this trade war, with the possibility that fires in the Amazon are being deliberately set to clear land for soybean exports to China. While the U.S. must absolutely crack down on China for its illegal trade practices, we can’t afford to do so in an incoherent and erratic way. Today’s announcement shows once again that the Trump Administration’s bizarre trade policies destabilize the economy, put the livelihoods of many Americans at risk, undermine global stability, and fundamentally fail to hold China accountable for its unfair practices.” 

According to an announcement by the Chinese finance ministry, China’s tariffs will range from five to ten percent on items such as agricultural products, apparel, chemicals, and textiles, in addition to a 25 percent tariff on automobiles and a five percent tariff on automobile parts. These levies are scheduled to take effect on September 1 and December 15, matching the dates of the President’s most recent tariffs.

Sens. Warner and Kaine have continuously warned the Trump Administration about how its haphazard approach on trade hurts Virginia’s families, businesses, and economy. According to the Virginia Department of Agriculture and Consumer Services (VDACS), China is the Commonwealth’s number-one agricultural export market for soybeans. In 2018, Virginia exported more than $58 million soybean products to China – an 83 percent decrease from 2017.

Update at 5:15 p.m. — New tweets from the president further escalate the trade war with higher tariffs.

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