ILMA Compoundings September 2016 - 26

INTERNATIONAL INSIGHT

Outlook on U.S. Exports:
Forecasting the "Perfect
Storm" or Something Else?
Kevin Krause

M

any of us are familiar with the
term "perfect storm." This
cliché implies conditions
are ideal for the creation of a pending
negative event. Recently, it has been used
to describe the outlook for U.S. exports.
Exporters continually hear the rumbles of
thunder from the industry and economic
press decrying the long-standing trade
imbalance for the United States and its
trading partners, recounting the fact
that imports significantly outweigh the
exporting of goods.

not limited to, commodities such as
commercial aircraft, industrial machines,
semiconductors, telecommunications,
electric apparatus and medical
equipment. The United States continues
to be a leader in the development
and production of these mid- to highvalue goods. The final third of U.S.
exports consists of industrial supplies

This imbalance has been a reality
for more than 20 years, as market
conditions favored the creation of
goods overseas, mainly in China.
With the strong dollar, U.S. goods
are, and have been for a while now,
more expensive than locally produced
goods. Critics suggest this may be the
perfect storm for continued flat or a
downturn in U.S. export volumes. Daily
indicators point to an export forecast
that is much less than stormy, but the big
picture suggests otherwise.

The diversity of commodities and cargo
values alone creates a solid foundation
for export growth while minimizing
volatility when other market factors,
such as currency, geopolitical shocks
to the market and fuel prices, can
adversely affect the growth of U.S.
exports. As economic history dictates,
countries that rely significantly on a few
large commodity segments face a greater
exposure risk to export growth. This
can be illustrated by the recent drop in
fuel prices, which took a large toll on
countries heavily reliant on oil exports,
like Russia.

A Diverse Mix of Goods is Driving
U.S. Exports
Consider this: The U.S. export
commodity base is a diverse mix of
goods and is well balanced across
many commodity segments and cargo
values. Aside from scrap and recycled
products, the remaining two thirds of U.S.
exports are diversified over the material
goods segment.1 This includes, but is

Partially finished goods or consumer
goods, which make up an estimated
23 percent of the total goods being
exported,2 include automobiles,
automotive and vehicle parts, foods,
mobile phone components, feeds,
beverages and pharmaceuticals. Other
commodities, such as textiles and glass,
will remain in demand in Southeast Asia
and Middle Eastern countries with heavy
construction projects underway. These
commodity sectors are anticipated to be
the largest contributors to U.S. export
growth between now and 2030.3

and equipment, chemicals, fuel oil,
petroleum products, resins, plastics
and nonmonetary gold. These are also
commodity segments in which the
United States is a long-standing leader in
production.

Additional Factors Affecting U.S.
Exports
Aside from the commodity mix, there are
many other factors that make exporting
from the United States ideal in the shortterm and make the 4 percent estimated
growth attainable.4

Vol. 66 No. 9 * 26 * September 2016 Compoundings
ILMA Compoundings September 2016

Table of Contents for the Digital Edition of ILMA Compoundings September 2016
