As of September 2017, US exports had risen just over 1% month-over-month totaling nearly 197-billion USD. This total was the highest mark reached in nearly three years. The increase of exported goods rose from just 1.8-billion to 130.6-billion USD; also, the highest mark since December of 2014.
As of now, the United States is currently the second-largest exporter in the world.
What are Exports?
To continue along, we’ll first need to understand what exactly exporting entails.
Simply put, an export is an international trade function that results in the produced goods of a given country being shipped to another for future sale or trade.
Exports play a significant role in the economy of a country because they create employment, revenue, and production.
The majority of United States exports come in the form of capital goods. Capital goods are goods that are used to produce other goods. A few examples of capital goods include:
Conversely, there are also consumer goods, which are essentially finished products available for use or consumption. These goods are what you see on shelves in stores. Some examples include:
To determine net exports, you must calculate the difference between exports of goods and services and imports of goods and services. The total production of U.S. goods and services are measured by gross domestic product (GDP), while gross domestic purchases reflect total imports and expenditures.
When imports exceed exports in a given country, it is referred to as a “trade deficit,” whereas when exports exceed imports, that country is in a “trade surplus.”
Top Exporting Countries
According to Statista, China led all countries in exporting by the close of 2016, registering an export value of over 2-trillion US dollars. The United States, Germany, and Japan all followed, with the US and Germany totaling nearly 1.5-trillion dollars in export value each.
Between 2002 and 2014, China’s exporting value skyrocketed. In this 12- year timeframe, their export value rose from 327-billion USD to over 2-trillion. A couple of China’s highest-yielding exports include products such as machinery, transport equipment, and clothing/accessories.
In the United States, transport equipment exports and computer electronics accounted for a large portion of export value, but it was livestock and livestock products that saw the largest increase (21%) back in 2012.
The largest portion of U.S. exports go north to Canada, totaling 19% through the end of 2016. Some other prominent exporting destinations and numbers are as follows:
- Mexico (16%)
- China (8.1%)
- Japan (4.4%)
- United Kingdom (3.9%)
- Germany (3.4%)
Through 2015, manufactures composed the clear majority of U.S. exports, totaling just under 75%. Agricultural products came in at just over 10%, while fuels and mining products accounted for 9.4% and other goods made up the remaining 5.1%.
There is a concern, however, that American manufacturing companies will have to compete in industries where overseas manufacturers can operate at lower costs. Thus, pricing American manufacturers out.
Although President Trump has removed the US from the Trans-Pacific Partnership in an effort to protect these American industries, the highly-globalized economy will still create pressure on these export sectors.
China is a leading producer of the world’s rare earths. This massive industry is responsible for the manufacturing of several products, including wind turbines, hybrid vehicles, and consumer electronics.
Both the United States and China are responsible for control over the most significant reserves, but it is China that mines roughly 90% of these rare earth minerals.
In 2014, China lost a trade dispute regarding their rare exports. The World Trade Organization determined that it was unfair trade practice to hoard raw materials from the global marketplace.
China had decided to put rare earth export quotas into place in 2010, citing an effort to reduce pollution and keep resources preserved. But the U.S. argued that these quotas allowed China to raise the prices of raw materials artificially – materials essential to the production of products such as wind turbines, hybrid car batteries, and lighting.
Why Were Oil Exports Banned in the U.S.?
In 1975, President Gerald Ford signed into law the Energy Policy and Conservation Act. The purpose of the bill was to put the United States on track to energy independence. The oil export ban was put in place to protect the country from global crude markets which can be extremely unpredictable.
However, the EPCA created quite a stir. Detractors felt that the bill had been dated for a long time and that oil was no longer a scarcity that the US needed to focus on keeping within its borders.
Many believed that lifting the ban could yield several positives such as rebounding prices and increased domestic output over the long-term. Proponents also believed that more oil activity in the US could save energy-industry jobs.
This isn’t to say that everyone was in favor of lifting the ban.
U.S. refiners had reason to favor keeping the ban in place because it enabled them to purchase oil at lower domestic prices before selling it for profit at higher global figures. The U.S. Energy Information Administration’s analysis revealed that refiners could stand to lose over $20-billion in annual profits by 2025 without the ban in place.
Additionally, environmentalists strongly opposed removing the ban.
Lifting the Ban
As it turns out, the refiners and environmentalists didn’t get their way, as the 40-year ban was finally lifted in early 2016.
The ban no longer seemed necessary, as the world had changed significantly in the interim with oil prices dropping below $30 a barrel. Some argue that the economics don’t lend themselves to oil trading worldwide and that crude is better left within US borders.
For a national economy to thrive, the goal is to be net exporters. Imports do serve a purpose, however, as they can provide access to specific products or resources that are otherwise not available at a cheaper cost. But when importing rises too far above exporting, it creates deficits which result in a myriad of issues.
An increase in exports will net more jobs, production, and total revenue. As a net exporter, the gross domestic product will increase. In simpler terms, being a net exporter grows the overall wealth of a given country.