You might not have noticed, but you haven’t been hearing much hullabaloo about record trade deficits recently. That’s because since 2006, there hasn’t been one.
From 1993 to 2006, the United States set a record for its trade deficit 12 out of 14 years, culminating in an $827.97 million deficit the last year. The next two years — in 2007 and 2008 — it topped $800 million again, but hasn’t done so since.
What happened? China? Guess again.
There are more “Made in China” labels than ever in our dressers and closets, our kitchens, our living rooms and TV rooms, and our offices. Since 1993, the U.S. deficit with China has set a record 18 out of 20 years — and 2014 will make the 19th time in 21 years when the annual data are released in about six weeks.
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The exceptions were 2001, when the terrorist strikes in New York City, Washington, D.C., and Pennsylvania sent the U.S. economy, already in recession, into a tailspin, and 2009, when the global economic crisis shook us to our collective cores.
In fact, over the course of the past two decades, the U.S. deficit with China has grown from $22.78 million in 1993 to something north of $325 million in 2014, a far faster clip than the U.S. overall deficit, which has grown in that same time period from $115.57 million to about $720 million last year.
In fact, it’s hard to remember this, but the United States’ largest deficit wasn’t even with China until 2000, the year before it entered the World Trade Organization. It had been with Japan for years prior.
So, if China’s not the reason for the reduced trade deficit, what is?
Simply put, exports, which had been growing faster in percentage terms, have more recently been growing more rapidly in dollar terms as well. The distinction is important because the former doesn’t necessarily lower the deficit — and wasn’t for a number of years early in the century — while the latter necessarily does.
The easiest way to understand this is to use imaginary numbers, to make believe that U.S. exports were at $100 million and U.S. imports at $200 million in some year. That’s a deficit of $100 million — subtracting imports from exports. If, the next year, exports were to increase 20 percent to $120 million and imports 15 percent to $230 million — the deficit will have actually increased, to $110 million, despite the more rapid growth rate of exports.
Remedial math lesson behind us, let’s look, then, at four areas to better understand increased U.S. exports: the countries receiving our exports, the exports themselves, the Customs districts where those exports are departing our shores, and the states generating those exports.
What do they tell us?
Over the course of the last decade, U.S. exports have increased 100.75 percent, according to WorldCity analysis of the most recent U.S. Census Bureau data, through the first 10 months of the year. That’s been the pace for the last several years, although it appears to be slowing slightly.
Among our top 15 export trade partners, the fastest growth over the past decade is with none other than China. U.S. exports there are up 252.52 percent. A decade ago, it ranked sixth among the nations receiving the most U.S. exports, behind Canada, Mexico, Japan, the United Kingdom and Germany. It has now surpassed the last three. Nevertheless, imports from China continue to outpace export growth in dollar terms. But because exports have been growing at a faster percentage, exports now account for 22 cents of every dollar of U.S. trade with China, compared with 15 cents a decade ago.
Second-fastest growth among the top 15 is with Brazil, with which the United States has a large surplus — and which is South Florida’s top trade partner. U.S. exports to Brazil through the first 10 months of 2014 are up 209.41 percent, when compared to the same 10-month period of 2004.
In fact, South Florida exports to Brazil have increased 162.90 percent in that time period — slower than the national rate — while overall exports from this area have increased 119.74 percent, which is faster than the national average. In dollar terms, South Florida exports to Brazil are up more than twice as much as any other country over the course of the last decade.
What about the exported commodities themselves?
The top 15 list shows five with a 10-year growth rate more than twice the average for all 1,200-plus export categories, and 10 with above-average growth.
Fastest-growing by far is the No.1 U.S. export, gasoline, which has increased more than 1,000 percent in value over the last decade, thanks to the shale oil boom and fracking. The value of seventh-ranked cellphone exports — which are not actually manufactured in the United States but simply re-exported, often with value added — has increased 258.80 percent while No.11 diamonds, not mined here, have increased 220.29 percent; No.12 gold, not mined here primarily, 479.93 percent; soybeans, 237.27 percent; and liquid natural gas and other petroleum gases, 539.80 percent.
South Florida has two top 15 exports that have increased more than 2,000 percent over the past decade — No.4 gold and No.7 printers. The only other top export to exceed 500 percent growth in that time period is No.2 cellphones — which are up 697.23 percent.
Looking at statewide data, which look at the origination of the export rather than the movement of the export through a specific port of Customs district, Florida bests the national average by a touch, with a 103.52 percent increase in the past decade, when comparing the first 10 months of each period.
Two states are growing at faster than 200 percent — Washington, which relies heavily on Boeing exports, and Louisiana, a prime beneficiary of the gasoline export boom.
So, what can we say about “the big why?” Why, when the annual trade statistics are released in about six weeks, will the deficit figure not be a record?
Several reasons: Gasoline exports have grown exponentially, and LNG has grown rapidly as well. While the deficit with China continues to grow, the balance of trade — the percentage of each dollar of trade that is a U.S. export — is getting more balanced as the United States becomes a larger market for Chinese purchases. Third, Brazil, despite current woes, continues to be a solid long-term market for U.S. exports.
Ken Roberts is the founder and president of WorldCity, a Coral Gables-based company that pays attention to the impact of globalization on local communities. More import-export trade data is available at www.ustradenumbers.com. He can be reached at email@example.com.
South Florida exports to the world
Change in rank
October 2014 YTD
October 2014 YTD
World total exports
Source: WorldCity analysis of U.S. Census data