Thursday, October 16, 2014

US Export and Import Figures and Why They May be Inaccurate

Two graphs from Westpac.

Canada is the US's most important export destination, followed by Mexico and the Eurozone. Who said that geography doesn't matter!

China (and Hong Kong) is the largest source of imports, followed by the Eurozone, Mexico and Canada.

The US is a big exporter of services and capital goods and a big importer of consumer goods (hence the dominance of Chinese imports). Interesting to note how important auto exports and imports still are. It will also be interesting to see what happens to petroleum and related over coming years. The US bans exports of oil and limits exports of gas. There is a good chance this will change in coming years. According to CFR: "Oil production has grown more in the United States over the past five years than anywhere else in the world, even as domestic oil consumption has declined."

The problem with these statistics is there failure to account for value-added. While the full value of exports is attributed to the final exporter of the product, lots of value added may have been created in other countries that export what are called intermediate inputs. The iPhone provides a good example of this. While the full cost of the iPhone is treated as a Chinese export only 3.6 per cent of the value-added is created in China.

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