Tennessee Trade Report 1st Quarter 2021

Tables and Graphs

Tennessee exporters shipped $7.851 billion in goods during the first quarter of the year. This was a modest 1.4 percent increase from the first quarter of 2020. It placed the state at 28th among the fifty states.

China and Hong Kong Led the Export Growth

Though the overall number was not much changed from a year earlier, it hides quite a bit of volatility. The pandemic played in out different ways across different markets. It was, for example, the relative robustness of the East Asian economies that lay behind the state’s best performances. Shipments to China gained over 35 percent from the 1st quarter of 2020 (to $656 million). Indeed, without China, Tennessee exporters would have experienced a net loss for the quarter. Exports to China were up almost across the board, led by products as varied as cotton, medical instruments, aircraft, and chemicals. More spectacular yet was Hong Kong. Tennessee shipments there soared from $142 million to $400 million. This is one of the biggest quarterly increases ever for a large market.  Unlike China, these exports were not diversified. They were basically one item, cell phones (which grew from $86 million to $333 million). The other two large regional markets, Japan and South Korea, struggled with more substantial covid problems, and, in turn, each fell by about 7 percent. In Japan, the decline was centered in medical instruments, that country’s largest import from this state.

Though the huge NAFTA market did not post the numbers of China, at least it grew! Thanks in large part to increases in car, aluminum foil, and computer shipments, exports to Canada were up about 8 percent (a gain of $140 million) while Mexico was basically unchanged at $965 million. Latin America also managed to hold its own despite a large loss in Chile. Overall, exports to South America rose modestly, from $379 million to $392, thanks mostly to gains in Brazil, Argentina, and Peru. That ends the good news.

But Exports Still Struggled in Many Regions

Tennessee exports were down to every other global region. In Southeast Asia, the drop was modest, less than three percent (to $574 billion). However, this is only because one country, the Philippines, grew strongly (over 40 percent) while everyone else declined.  It was that same product, cell phones, that drove the Philippine gains. State exporters took a loss of some thirteen percent in Europe. Italy (precious scrap metal), Germany (car engines), Ireland (blood sera) and Belgium (medical instruments) all suffered declines. Only the Netherlands and France bucked the trend. The UK was even worse, with Tennessee sales falling eighteen percent (to $154 million). Here the major declines were in EV batteries and aircraft. By far the most difficult region was the Middle East. Half the exports to Turkey were lost (primarily cotton), while exports to Saudi Arabia, the U.A.E. and Bahrain all fell due to reduced car shipments. In total, Tennessee sales to the Gulf states dropped from $219 million in the first quarter of 2020 to $121 this past quarter.

Spectacular Growth for Cell Phones, but Declines in Many Medical Industries

Turning to individual export industries, the clear star performer were those cell phones. With massive increases in shipments to Hong Kong and the Philippines, cell phone exports soared from $125 million to $429 million. Absent this industry, the state’s total exports would have been in the red for the quarter. The medical sector posted sizable gains for immediately needed products (medicaments, pharmaceuticals) but even larger losses for goods used in more elective health care. Medical instruments, the state’s single largest exported good (at the 6-digit HS) fell from $790 million to $666 million, while artificial joint shipments dropped from $103 million to $66 million. Presumably this is a consequence of changes in health care usage during the pandemic. Many automotive parts shipments declined, notably car engines and EV batteries, but cars themselves held up well. As we have seen exports to the Middle East fell sharply, but shipments to Canada and Mexico gained 14 percent (to $514 million). Given the novelty of a pandemic-ridden global economy it is hard to draw too many conclusions about the quarter’s export performance or to make very good guesses about what is to come. Perhaps we should be happy to simply settle for Tennessee’s solid but not spectacular performance this past quarter.