, , , , , , , , , , ,

It’s June! Or it’s June at least according to the folks at the U.S. Census Bureau who track America’s international trade flows. And the arrival of this mid-year point means it’s a good time to see effectively various segments of the country’s economy are competing in the global economy, including here at home.

As with most of American life, this regular RealityChek exercise has been deeply affected by the arrival of the CCP Virus, and in particular, by the historic recession (and maybe depression) it’s triggered due to widespread lockdowns. But even though the figures below – which cover the nation’s goods industries but leave out services (because the government database I rely doesn’t report on the latter, and because comparably detailed data won’t be released for a while) are seriously distorted by the pandemic, they’re useful for three reasons.

First, they suggest which parts of the economy are holding up better and worse during a public health crisis the likes of which are, scarily, likely to recur more than once down the road. Second, the goods industries examined here (manufacturing, agriculture, minerals, and energy) have been affected less dramatically than most service industries, which depend heavily on various degrees of personal contact with customers. Therefore, the virus distortion isn’t nearly so great as might be initially supposed. Third, since all these goods sectors s have been affected by the CCP Virus, their trade performance could well reveal important information about their underlying strengths and weaknesses.

We’ll focus today on actual trade balances – deficits and surpluses – and how they’ve changed between the first half of last year and the first half of this year. As usual, the figures come from the U.S. International Trade Commission’s terrific Trade Dataweb interactive search engine. The goods categories used are those of the North American Industry Classification System (NAICS) – the federal government’s main way to slice and dice the U.S. economy. And the level of disaggregation I’m using is the sixth, since it’s the level at which you can keep the numbers of sectors analyzed manageable, and at the same time make distinctions between final products on the one hand, and their parts and components on the other (vitally important given much more specialized manufacturing has become).

One anomaly you may notice right away: Although these are both Top 20 lists, they each have more than 20 entries. The reason? Truly bizarre changes in the way the government reports results from the aerospace sector. Once upon a time, Washington used separate NAICS 6 categories for aircraft, non-engine aircraft parts, and aircraft engines and parts. Now they’re all being combined – except where they’re not! The best way I could think of to offset these inconsistencies was to include all the aircraft-related figures when they showed up in the Top 20, but add the twenty-first or twenty-second industry on that list to get the closest approximation of a real Top 20.

Let’s start with those parts of the economy that posted the biggest trade surpluses in the first half of 2020, the actual totals in billions of current (i.e., pre-inflation) dollars, and how this list compares with its counterpart from last year. A dash here means that that sector didn’t appear on the top 20 2019 list at all.

Top 20 2020 trade surpluses                                                          2019 rank

1. civilian aircraft, engines, equipment, parts:        $39.475b              –

2. petroleum refinery products:                               $16.138b              1

3. natural gas:                                                          $12.647b              –

4. other special classification provisions:               $10.927b               2

5. plastics materials and resins:                                $8.720b               3

6. waste and scrap:                                                   $6.403b               5

7. soybeans:                                                             $5.882b                4

8. semiconductors:                                                  $5.748b              12

9. corn:                                                                    $4.678b                9

10. used or second hand merchandise:                   $4.635b                7

11. non-poultry meat products:                              $3.388b              10

12. non-anthracite coal & petroleum gases:          $2.982b                 6

13. motor vehicle bodies:                                      $2.915b                 8

14. wheat:                                                             $2.847b                13

15. semiconductor production equipment:           $2.651b                 –

16. tree nuts:                                                         $1.890b               14

17. prepared or preserved poultry:                       $1.825b               17

18. invitro diagnostic substances:                        $1.653b               18

19. paperboard mill products:                              $1.621b               20

20. surface active agents:                                     $1.614b                –

21. computer parts:                                              $1.586b               15

What jumped out at me right away is that, with three exceptions, the top 20 (actually, top 21) for this year and the list last year were identical. Only three sectors – natural gas, semiconductor production equipment, and surface active agents were newcomers to the 2020 list. And shuffling around between these groups was pretty mimimal. Eight of the sectors either maintained their exact same rank between 2019 and 2020, or only moved one spot. Three more moved only two spots. Given the stunning disruption of life in the United States all around the world, those results seem remarkably stable – and indicate that this group of big American trade winners boasts impressive resilience.

From another vantage point, ten of the 21 sectors on the list were manufacturing industries. In 2019, manufacturing placed only eight representatives in the top 21. So for manufacturing fans (as everyone who’s hoping for enduring American prosperity should be), 2020 has been a year of progress so far.

Below are the goods sectors of the economy with the 21 biggest trade deficits.

Top 20 2020 trade deficits                                                           2019 rank

1. autos and light trucks:                                        $42.120b             1

2. goods returned from Canada:                            $39.008b             2 

3. pharmaceutical preparations:                            $34.867b              4

4. computers:                                                         $29.647b             5

5. broadcast & wireless communications equip:  $26.848b              3

6. smelted/ refined non-ferrous non-alum metal: $19.228b              –

7. miscelleaneous extruded non-ferrous metals:  $15.885b              –

8. women’s cut and sew apparel:                          $14.691b             6

9.crude oil:                                                           $13.658b              –

10. non-diagnostic biological products:              $12.486b            14

11. men’s cut and sew apparel:                              $9.706b              7 

12. printed circuit assemblies:                               $9.571b            15 

13. footwear:                                                         $9.276b              9

14. miscellaneous motor vehicle parts:                 $9.176b            10 

15. miscellaneous textile products:                       $8.892b             –

16. aircraft engines and parts:                               $8.709b             8

17. audio and video equipment:                            $8.107b            11

18. major household appliances:                           $6.801b             –

19. medicinal & botanical drugs & vitamins:       $6.651b             –

20. iron and steel products:                                   $6.460b             –

21.miscellaneous plastics products:                      $6.454b           20

One big difference between this list and the trade surplus list: Fully seven industries this year are newcomers. Even so, however, of the 13 sectors that made it onto both lists, shuffling was actually more limited as on the trade surplus list. Nine of them either held the same ranking or only moved one rung up or down the latter.

This trade deficit list, however, is much more manufacturing-heavy than the surplus list. In fact, it’s nearly twice as manufacturing-heavy, with such sectors accounting for 19 of the 21 on each A final, discouraging, difference: The trade deficits of the leading deficit industries are much bigger than the surpluses of the leading surplus industries. That’s a good reminder that even though the overall goods trade deficit (also called the merchandise trade deficit) is down 5.15 percent on a year-to-date basis so far, it was still more than $391 billion.  Similarly, although the manufacturing deficit is down 4.53 percent on a year-to-date basis, it’s still come in at $476.90 billion so far in 2020.  

But we’re far from finished analyzing the year-to-date trade flows. When it comes to trade balances, we still need to look at more dynamic figures – that is, at which sectors have seen the greatest improvements in their trade balances, and which have seen the greatest deterioration. And of course we can’t forget the export and import figures that comprise the trade balance data, and how they’ve changed between January and June of last year and January and June of this year. Keep checking in with RealityChek for those results!