A Milestone in Trade

In 1987  the G6 countries (Canada, France, Germany, Italy, Japan, and the UK) accounted for 55% of U.S. goods imports. That same year, China, Mexico and Brazil only accounted for 8% of imports.

In 2010 the U.S. reached a milestone–for the first time, imports from China/Mexico/Brazil exceeded imports from the G6 countries. In the year ending March 2011, imports from China/Mexico/Brazil equaled 32% of goods imports, compared to 31% for the G^ countries. Here’s another way of seeing the same thing. Please note that OPEC’s share, and the share of “all other countries,” don’t change very much. It’s really the G6 versus a handful of  low-cost importers.

One final note. The shift in sourcing is most likely happening because the goods made in China/Mexico/Brazil are less expensive than the same goods made in France/Germany/UK. Unfortunately, the BLS import price statistics are not able to pick up the price drops from shifts in country sourcing.

Suppose for example that goods made in China are sold for one-third less than the same goods made in Japan. Then for the same physical quantity of imports, that shift in sourcing will cause the nominal value of imports to be one-third lower. This imparts a significant downward bias to the import penetration ratio.

Comments

  1. Smart business people should pay attention to this – with slow growth in the U.S. these are the countries with potential market opportunities.

  2. spencer says:

    The answer is maybe. The price indices will also reflect the point that goods purchased in the economy will be cheaper. For example the deflator for GAFO goods — retail sales of department store type goods — has fallen every year since 1985, typiceally at a minus 1% to -3% rate..

    I know you believe that the price deflaters fail to capture the lower costs of imports,
    but you have not demonstrated the truth of this statement sufficiently to convince me.

    Moreover, if it is true it would be inconsistent with your belief that we have significantly overstated growth. If imports were really cheap than our standard of living would have risen by more than the data states.

    Remember, final products only account for about half of imports. The other half of imports are energy and industrial raw materials where prices have been rising sharply for
    the last 15 years or so.

Trackbacks

  1. [...] Crossposted from Mandel on Innovation and Growth. [...]

  2. [...] UK) accounted for 55% of U.S. imports, while imports from China, Mexico and Brazil combined for 8%. In 2010, imports from group BMC equaled 32% of imports, compared to 31% from the G6 countries. This changing of the guard was as quiet as the midnight shift at Buckingham [...]

  3. [...] for more than half of all global growth, up from one third now. Mike Mandel points out that we’ve hit a milestone in trade: “For the first time, imports from China, Mexico, Brazil exceeded imports from the G6 [...]

  4. [...] for more than half of all global growth, up from one third now. Mike Mandel points out that we’ve hit a milestone in trade: “For the first time, imports from China, Mexico, Brazil exceeded imports from the G6 [...]

  5. [...] for more than half of all global growth, up from one third now. Mike Mandel points out that we’ve hit a milestone in trade: “For the first time, imports from China, Mexico, Brazil exceeded imports from the G6 [...]

  6. [...] than half of all tellurian growth, adult from one third now. Mike Mandel points out that we’ve hit a milestone in trade: “For a initial time, imports from China, Mexico, Brazil exceeded imports from a G6 [...]

  7. [...] than half of all tellurian growth, adult from one third now. Mike Mandel points out that we’ve hit a milestone in trade: “For a initial time, imports from China, Mexico, Brazil exceeded imports from a G6 [...]

  8. [...] from Mandel on Innovation and Growth. Tagged Commerce, Economy, [...]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Archives

Follow

Get every new post delivered to your Inbox.

Join 65 other followers

%d bloggers like this: