The U.S. International Trade Commission has finally added the June American trade statistics to its wonderful Trade Dataweb, an invaluable database and search engine. So now it’s possible to view in needed detail the nation’s trade performance for the first half of 2017, and the first groups of these figures is presented below.
Just so you’ll know exactly what you’re seeing, these are results according to the most granular level of the North American Industry Classification System (NAICS), the federal government’s main system for slicing and dicing industry-specific economic data. I like this six-digit level because it draws the greatest number of distinctions between final manufactured products and the parts and components of these products. This distinction is critical because the rapid growth in recent decades of global supply chains (i.e., the rapid growth of American production offshoring) means that a large percentage of U.S. and global trade consists of trade in these manufacturing inputs.
Another technical note: Because trade data for major aerospace products aren’t made public in order to protect corporate information considered proprietary, the six-digit NAICS results in this sector are unreliable, and the five-digit level data are being used.
So here are the nation’s top ten goods exports for the first half of this year, and how their performance has changed in dollar terms since the first half of 2016:
1. Aerospace: -4.0 percent
2. Petroleum refinery products: +26.1 percent
3. Autos & light trucks: -8.5 percent
4. Special classification provisions: +9.7 percent
5. Semiconductors & related devices: +4.7 percent
6. Miscellaneous auto parts: +1.4 percent
7. Miscellaneous basic organic chemicals: +3.7 percent
8. Pharmaceuticals: +3.9 percent
9. Plastics materials & resins: +6.3 percent
10. Primary smelted non-ferrous metals: +54.0 percent
It’s an encouraging list because most of these products are high-value manufactures, which historically have been very productive, still create lots of high-wage jobs, and incorporate lots of innovation. At the same time, these export growth rates seem pretty meh.
Here is a similar list of the top ten goods import categories and how their levels have changed on a year-to-date basis:
1. Autos & light trucks: +4.5 percent
2. Crude oil & natural gas: +53.7 percent
3. Pharmaceuticals: +2.3 percent
4. Goods returned from Canada: +4.3 percent
5. Broadcast & wireless communications equipment: +10.3 percent
6. Computers: +6.2 percent
7. Telecomms equip: +8.2 percent
8. Aerospace products: -3.4 percent
9. Petroleum refinery products: +22.2 percent
10. Semiconductors & related devices: -6.4 percent
This looks like a higher value list, and the growth rates seem somewhat higher. So that appears less bullish.
The real test of trade performance, though, has to do with trade balances. For the theory of comparative advantage that’s at the heart of modern thinking and policy in the trade field tells us that economies that trade goods and services most successfully (as indicated by surpluses) will wind up as the most successful producers of those goods. Conversely, economies that trade goods and services least successfully will wind up as the least successful producers of those goods. How else could unfettered trade flows create an optimal global division of labor – which is supposed to be their prime economic virtue according to mainstream economics?
So here are the ten goods sectors that wracked up the biggest trade surpluses in the first half of this year, and how those balances compare with the first-half 2016 figures:
1. Aerospace products: -2.03 percent
2. Petroleum refinery products: +33.11 percent
3. Plastics materials & resins: +4.73 percent
4. Soybeans: +28.21 percent
5. Other special classification provns: +7.13 percent
6. Corn: +20.26 percent
7. Waste & scrap: -7.82 percent
8. LNG: +56.54 percent
9. Semiconductor machinery: +64.73 percent
10. Non-anthracite coal & natural gases: +223.22 percent
If you recognize the outsize economic value of manufacturing, this is a less encouraging list, since fully half the products are commodities. Nor is the growth rate of the surpluses in these manufacturing sectors impressive except for semiconductor production equipment and petroleum refinery products.
And here’s the trade balance flip side: the sectors with the top ten U.S. goods trade deficits and their rates of change:
1. Autos & light trucks: +10.64 percent
2. Crude oil & nat gas: +45.31 percent
3. Goods returned from Canada: +4.25 percent
4. Computers: +1.16 percent
5. Broadcast & wireless communications equip.: +11.06 percent
6. Telecomms equipment: +19.10 percent
7. Printed circuit assemblies: +47.12 percent
8. Audio & video equipment: -11.50 percent
9. Institutional furniture: +8.56 percent
10. Iron & steel: +76.28 percent
This list is full of high-value manufactures – so that should be a concern. Ditto for the growth rates, which are mainly well into the double-digits. And check out the number for steel — a sector that’s been making headlines because of the Trump administration’s consideration of national security-related tariffs.
Coming up tomorrow: the best and worst export and import growers, and the sectors with the most rapidly improving and the most rapidly worsening trade balances.