February 21, 2020 2019’s Biggest U.S. Trade Industry Winners and Losers

An analysis of U.S. trade flows for 2019 (compared to 2016 – the last year of the Obama administration and of pre-Trump trade policies).

By Alan Tonelson

President Trump has set out to overhaul America’s trade policy, and RealityChek has presented abundant evidence showing that, from the proverbial 30,000-foot level and somewhat below, his years in office have seen impressive progress that’s laying the foundations for a healthier economy.

But what about the makeup of U.S. trade flows? Similar progress has been documented here in the recent leveling off of the still-enormous American trade gap in manufactured goods (despite the safety-related woes of aircraft giant and mega-exporter Boeing) and minimal growth in the Made in Washington trade deficit – the shortfall in those flows most strongly influenced by American trade policy decisions (i.e., which leave out oil and services trade).

At the same time, a detailed industry-by-industry examination of U.S. trade patterns reveals changes that have been more modest, though worth examining, especially when a reasonably obvious comparison is made with their counterparts during the last year of the Obama administration – which the President and his supporters (including me) view as a trade policy failure. Specifically, over these three years, the lists of the American industries that ran the biggest trade surpluses and deficits remained practically the same. By contrast, the lists of sectors that saw their trade balances improve or worsen to the greatest extent had almost nothing in common.

Let’s begin with one of Mr. Trump’s priority objectives – reducing the trade deficit. Despite the different look of aggregate deficits, one key measure of the industries winning and losing out most from trade looks remarkably similar last year to its appearance in the final Obama year, 2016. That’s the sectors of the U.S. economy with the biggest trade surpluses. Below are the Top 20 for 2019, in descending order. The magnitude of the 2019 surplus in value terms comes after the sector’s name, and the right-hand column shows how these industries ranked in 2016. Last year’s trade surplus champions that didn’t make the 2016 list are designated with a hyphen.

The categories come from the federal government’s North American Industry Classification System (NAICS), which has become Washington’s predominant system for slicing and dicing the domestic economy. They represent NAICS’ most granular level of disaggregation – the sixth level. And they leave out a catchall aerospace category that includes both planes and their parts – as opposed to many other NAICS-6 categories, which present the two separately.

Leading 2019 trade surplus sectors                                  2016 rank

1. petroleum refinery products: $30.71b                               1
2. special classification goods: $26.27b                                3
3. plastics materials & resins: 18.74b                                   4
4. soybeans: $18.46b                                                            2
5. waste and scrap: $13.11b                                                 5
6. non-anthracite coal & petroleum gases: $9.27b            16
7. used or second-hand merchandise: $9.16b:                  10
8. motor vehicle bodies: $9.12b                                         7
9. corn: $7.57b                                                                   6
10. non-poultry meat products: $7.36b                            11
11. cotton: +$6.23b                                                          14
12. semiconductors: +$5.91b                                            –
13. wheat: $5.84b                                                            13
14. tree nuts: +$5.10b                                                      15
15. computer parts: +$4.76b                                             9
16. misc basic inorganic chemicals: $3.88b                     –
17. prepared or preserved poultry: $3.75b                      18
18. in-vitro diagnostic substances: $3.39b                      20
19. surface active agents: $3.23b                                    19
20. paperboard mill products: $3.12b                              –

As the table makes clear, there’s been some reshuffling in this group, but not much. Indeed, 17 of the 2016 Top 20 made the 2019 Top 20, and all of the top five in 2016 were top five in 2019, though three of these industries switched orders. And the only major ranking changes occurred in non-anthracite coal and petroleum gases (which move up six places), and in computer parts (which moved down six).

Also of note: In 2016, eight of the Top 20 trade surplus sectors were manufactures, and this number rose to only nine in 2019. So despite the Trump administration’s focus on strengthening domestic manufacturing, little change is evident from this list of leading net exporters.

Yet very different results emerge from a different measure of trade excellence – the twenty industries that have seen their trade balances improved the most between 2018 and 2019, and between 2015 and that final Obama year 2016. Here, for three reasons, I’ve limited the total number of industries I’ve examined to the hundred biggest trade surplus and trade deficit industries.

First, these sectors represent the vast bulk of U.S. goods trade. Second, they enable a filtering out of the “small numbers effect” (that is, big percentage moves that are generated when sectors with small trade flows experiencing changes that are small in absolute terms but big in relative terms). Third, including the big deficit industries enables the identification of sectors whose trade shortfalls have shrunk the most – which on in trade accounting means just as much as boosting surpluses. (These sectors are the ones marked “DF,” for “deficits fell.”)

Just as with the first table, also presented here is where 2019’s biggest trade balance improvers ranked in 2016. And the big takeaway is that overwhelmingly, they didn’t rank at all. An amazing sixteen out of twenty sectors that improved their trade balances the most last year weren’t even on this Top 20 list just three years ago.

Leading trade balance improvers 2018-19                                       2016 rank

(including percentage changes)

1. semiconductors: +196.2 percent                                                         –
2. perfumes, makeup & other toiletries: +147.4 percent                        –
3. dental laboratories products: +120.0 percent                                     –
4. non-small arms ammunition: +79.8 percent                                      6
5. dried peas & beans: +60.4 percent                                                    7
6. carbon & graphite products: +55.9 percent                                      –
7. oil & gas field machinery & equip: +49.3 percent                           –
8. animal fats, oils & byproducts: +48.9 percent                                 –
9. petrochemicals: +44.9 percent                                                         1
10. computer storage devices: +42.7 percent                                    19
11. ships: +40.2 percent                                                                      –
12. misc chemicals: +35.1 percent                                                     –
13. cheese: +34.0 percent                                                                   –
14. potatoes: +33.6 percent                                                                 –
15. jewelry & silverware: +32.1 percent (DF)                                    –
16. search, navigation, detection instruments: +31.1 percent (DF)    –
17. printed circuit assemblies: +31.6 percent (DF)                            –
18. missile & space vehicle engines & parts: +30.0 percent             –
19. motor homes: +28.0 percent                                                        –
20. specialty canned foods: +27.6 percent                                         –

But also interesting – despite the extensive turnover, for both years, 13 of the twenty top trade balance improvers were manufacturing industries.

Maybe, however, the story is significantly different on the deficit side of the trade ledger? Not meaningfully. Below is a list of the twenty American sectors with the biggest trade shortfalls in absolute terms, in descending order. The actual deficits are included, too. In the right-hand column is their ranking on a similar 2016 table. And as with the surplus table above, that catchall aerospace category is excluded.

Leading 2019 trade deficit sectors                                                 2016 rank

1. autos & light trucks: $126.60b                                                        1
2. goods returned: $91.06b                                                                 4
3. broadcast & wireless communs equip: $73.74b                             3
4. pharmaceutical preparations: $62.36b                                            5
5. computers: $59.62b                                                                        6
6. female cut & sew apparel: $42.13b                                               7
7. male cut & sew apparel: $30.97b                                                   8
8. aircraft engines & engine parts: $25.68b                                     12
9. footwear: $25.62b                                                                        10
10. misc motor vehicle parts: $23.69b                                             11
11. audio & video equip: $21.71b                                                     9
12. dolls, toys & games: $17.37b                                                    13
13. iron & steel & ferroalloy products: $17.03b                             16
14. non-diagnostic biological products: $16.97b                             –
15. printed circuit assemblies: $16.75b 1                                         4
16. motor vehicle electrical & electronic equip: $14.63b              15
17. aircraft parts & auxiliary equip: $14.02b                                 18
18. light truck & utility vehicles: $13.19                                        –
19. misc plastics products: $13.03b                                                –
20. curtains & linens: $12.18b                                                       17

In this case, 17 of the 2019 Top 20 were in the 2016 Top 20. And the order hasn’t changed much, either – except arguably in the case of aircraft engines and engine parts, iron and steel and ferroalloy products, and curtains and linens. One major change does need to be noted, though: You may have observed that the second biggest trade deficit industry in 2016 didn’t make the 2019 list at all. That sector? Crude oil and natural gas, thanks to the U.S. energy production revolution of recent years.

All the same, the 2016 and 2019 lists of biggest trade deficit industries are pretty much…all the same. They’re also both manufacturing dominated, with that super-category accounting for 19 of the Top 20 deficit sectors in 2019 and 18 in 2016.

Turn to the industries whose trade balances have worsened the most (including sectors whose surpluses have declined), and you see a substantially different 2016-2019 comparison – but one strongly resembling that between the sectors whose trade balances have improved the most in 2016 and 2019: showing big-time turnover. (As with the biggest trade balance improvers’ list, the following are drawn from the hundred biggest trade surplus and trade deficit industries.) Those sectors whose surpluses fell are designated with (SF):

Leading trade balance “worseners”                                                      2016 rank

(including percentage changes)

1. non-aluminum, non-ferrous metal refining/extruding: +74.0 percent     1
2. semiconductor machinery: +70.8 percent (SF)                                       –
3. military armored vehicles & parts: +53.9 percent (SF)                          –
4. tobacco: +51.4 percent (SF)                                                                   –
5. electricity measuring & testing instruments: +50.8 percent (SF)          –
6. construction machinery: +47.4 percent                                                10
7. misc non-ferrous secondary smelting/refining: +47.3 percent (SF)     –

8, iron ores: +45.4 percent (SF)                                                                –

9. corn: +39.2 percent (SF)                                                                       –
10. non-reinforced plastic plate & sheet: +35.3 percent (SF)                   –
11. margarine & edible fats & oils: +34.6 percent (SF)                           –
12. timber & logs: +33.4 percent (SF)                                                     –
13. mobile homes & trailers: +30.5 percent (SF)                                    –
14. missiles, space vehicles & parts: +29.8 percent (SF)                        –
15. misc electrical equip & components: +27.4 percent                         –
16. non-diagnostic biological products: +23.1 percent                           –
17. aircraft engines & engine parts: +19.8 percent                                 –
18. light trucks & utility vehicles: +19.7 percent                                   –
19. chocolate & confectionary products: +18.4 percent                         –
20. fabricated structural metals: +17.2 percent                                     12

No fewer than 18 of the 20 sectors on the 2019 list don’t appear on the 2016 list. As for the two that did, construction machinery worsened its relative performance (moving up from the tenth worst sector in this respect to the sixth worst) and fabricated structural metals improved its relative performance (moving from the twelfth worst to the twentieth worst industry).

Of modest significance, though, for manufacturing: It accounted for only 15 of these Top 20 biggest trade losers in 2019, down from 18 in 2016.

The implications seem strikingly clear – though one is much more surprising than the other. The not-so-surprising conclusion: Because the supertanker of U.S. trade flows is so big, changing it dramatically is a long-haul affair. So industries that are the biggest trade losers and winners in 2016 can be expected to hold the same positions in 2019.

But on a more dynamic basis (improving and worsening trade balances) substantial change is possible in a three-year period – both for better and for worse.

Tomorrow we’ll turn from industries’ trade balances to how well these generalizations hold for the sectors with the most and the fastest-growing exports and imports.

ALAN TONELSON
Alan Tonelson, a columnist for IndustryToday, is founder of the RealityChek blog (alantonelson.wordpress.com), which covers manufacturing, trade, the economy, and national security. He has written for many leading publications on these subjects and is the author of The Race to the Bottom (Westview Press, 2000).

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