Tennessee Trade Report 4th Quarter 2019

Tables and Graphs

The fourth quarter of 2019 rounded off a difficult year for Tennessee’s exporters. Another $500 million loss in foreign shipments from Q4 2018 contributed to a 5 percent ($1.6 billion) loss for the full calendar year. Continuing the trend of previous quarters, there were major declines in auto and metal-related industries, in part due to the continued tariff war. In addition, whiskey exports continue to fall, especially in Europe and the U.K.  

The Medical Industry Continues to Grow

Medical exports, particularly orthopedic goods, which grew by nearly $106 million, had strong showings. Exports of medical equipment rose 12% and medical accessories rose by 30%, contributing approximating $87 million and $18 million in export gains respectively. Another industry, scrap precious metals, saw sizable gains as well, with its exports rising by $32 million. Additionally, the export of silicon grew from $28 million to $46 million for the quarter.  Surprisingly, a substantial portion of the latter gain was to China.  

But Other Industries Suffered Heavy Losses

Civilian aircraft engines and parts suffered heavy losses of nearly 35% while motor vehicle exports fell from $700 million in Q4 2018 to less than $550 million in 2019. The decline in auto exports was deepest for SUVs, which saw export losses of more than $150 million. Shipments of electric cars dropped by more than half, largely due to the trade war with China. While auto engine parts rose, many other automotive products declined alongside vehicle shipments.  The export of steering wheels, for example, fell by more than 50%. In fact, five of the ten top export industries in Tennessee saw losses this past quarter. Aluminum exports fell by nearly two-thirds. Among smaller export sectors, DVD exporters had a particularly difficult quarter, which shipments off more than $56 million, more than half of their 2018 Q4 exports.  

It was a bad for quarter for the new USMCA

Tennessee saw exports to its NAFTA partners fall by 17% for Canada and 20% for Mexico as compared to Q4 last year. This led to a combined loss of approximately $1.5 billion in 2019. Canada saw major losses in the auto industry, losing $153 million in large engine vehicles alone, a 52% decrease. The camera (-$57 million) and heavy machinery (-$60 million) sectors also struggled this quarter. Mexico’s greatest losses were seen in aluminum exports, down a staggering 78% accounting for $66 million in losses. The export of cell phones also fell by $29 million, a 97% decrease compared to Q4 last year.  

Exports to the Eurozone gained slightly in the fourth quarter (to $1.185 billion) but that was not enough to prevent a modest loss of around $50 million for the full year. Foreign shipments to the U.K., however, fell by $115 million, with whiskey sales down to $1.5 million compared to $18 million in Q4 2018. Unsurprisingly, there also continues to be major decreases in exports to China. While exports did rise $50 million for Q4 there was a loss of $400 million on the year. It is unlikely U.S.-China trade relations will improve anytime soon and those losses will need to be made up elsewhere. Exports to Japan increased another $20 million over Q3 which contributed to a gain of 7.5% on the year. Gains in Q4 this year over last were made in artificial joints, up $29 million, and surgical equipment, up $19 million. Exports to S. Korea fell by 2.8% this year, with decreases in the auto and electrical industries being echoed here as well.    Exports rose to South America though and there was an increase of $50 million over Q4 last year, rounding out an increase of about $100 million in 2019. This is mostly thanks to a 28% increase in shipments to Brazil, where Tennessee businesses greatly expanded pharmaceutical and microchip exports.  

We continue to wait for a turn-around from some difficult quarters. But absent any good news on the global trade front, it is not clear when this will happen.  

this report was written by Elden Winkelman, International Affairs Program, MTSU