U.S. Auto Parts Trade Deficit Widens By 66 Percent In First Half Of 1998
24 September 1998
BETHESDA, MD, Sept. 24 -- The U.S. auto parts trade deficit jumped 66 percent in the first half of 1998, climbing to $2.5 billion and reversing a two-year trend of declining deficits, according to a report published by The Autoparts Report. The report, compiled from U.S. Customs data, concludes that both U.S. imports and exports increased in the six-month period, but the relative growth in imports outpaced that of exports, resulting in a higher auto parts trade deficit. The largest change occurred in trade with Mexico, as the auto parts deficit spiraled by $521 million during the six-month period, or by 28 percent, reflecting a surge in U.S. imports that outpaced a slight increase in U.S. exports to its southern neighbor. Higher imports from Canada lowered the U.S. trade surplus with that country to $5.75 billion, a decline of 4.3 percent. Despite the weak yen during the first half of 1998, the value of imports from Japan dropped, while U.S. exports were higher. The net effect was a lowering of the U.S. trade deficit with Japan to $4.9 billion. A strong surge in imports from the United Kingdom pushed up the U.S. trade deficit with that country by 141 percent. Imports from the UK jumped to $507 million in the first half of 1998 - a 27 percent increase over the previous year's first half results. Regional Trade On a regional basis, the U.S. auto part's deficit grew by 8.5 percent with Far East countries, reaching $6.1 billion. Despite a lower deficit with Japan, the U.S. registered a higher deficit with other economies in the region. The balance of trade with Singapore plunged to a deficit of $29 million from a surplus of $28 million - a drop of 197 percent, as U.S. exports fell sharply. U.S. exports to the Philippines plummeted 71 percent, reflecting the economic crisis in that country. Similarly, a decline in U.S. exports to Malaysia, coupled with higher imports from that market, boosted the U.S. deficit with Malaysia by almost 20 percent. Higher imports from China and lower U.S. exports to that country, resulted in a $445 million deficit in the first half of 1998, an increase of 63 percent from the $273 million deficit recorded a year earlier. The U.S. deficit with the European Union countries topped $770 million in 1998, as higher U.S. exports to the region were more than offset by the growth in imports. France, the United Kingdom, Italy and Germany registered higher exports to the U.S. in the first half of 1998. With the exception of the United Kingdom, U.S. exports to the other countries declined. U.S. auto parts trade with South America benefitted from sharply higher exports to the region. Exports from the U.S. soared by almost 42 percent for the first six months of 1998, topping $858 million. Exports to Brazil, which accounted for more than half of all U.S. auto parts exports to the region, jumped 68 percent to $426 million. U.S. exports to Argentina climbed to more than $190 million - a gain of 43 percent. The U.S. auto parts trade surplus with Central America climbed 54 percent to $563 million in the first half of 1998. U.S. trade with Eastern Europe grew significantly in the first six months of this year, with imports from the region rising to almost $100 million. The sharp increase in imports, coupled with a decline in U.S. exports, pushed the balance to a deficit of $25 million - a decline of more than 1,590 percent. Product Groups Imports of most product categories increased in the first half of 1998 reflecting, in part, greater offshore sourcing by U.S. auto makers and their major suppliers. Growth in aftermarket parts imports also added to the higher level of overall imports. Transmissions and parts imports climbed by more than 20 percent in the first half of 1998, reaching $2.28 billion. Imports from Japan, accounting for more than half of all imports of this category, increased by almost 13 percent to $1.28 billion. Imports of these products from Canada and Mexico, soared by 53 percent and 244 percent, respectively. A 26-percent decline in imports of gas engines and parts from Japan helped push down total imports of these products by almost 4 percent to $3.18 billion. A sharp increase in U.S. exports of gas engines to Canada, helped boost total exports of that product group by almost 11 percent to $1.88 billion. Exports of seats and car interior components expanded by 13.5 percent to $0.93 billion, based principally on higher exports to Mexico. Outlook Economic factors unfolding in the global economy will likely have a major downward impact on the U.S. balance of trade in auto parts. If the output of autos decline worldwide, U.S. auto parts exports will continue to suffer and lower priced imports will increase, according to Ron DeMarines, publisher of The Autoparts Report. "Unless Asian, Eastern European, Latin American and Canadian economies improve in the second half of the year, the expected trend is for a growing U.S. deficit in auto parts," he said. The 220-page report is a comprehensive review of U.S. imports, exports and trade balance in auto parts with more than 200 countries. The report also examines imports in 57 product groups and exports in 52 product groups. This report will be updated quarterly to track the U.S. trade flow in automotive parts and accessories. The information is derived from U.S. Census import and export data from the U.S. Department of Commerce. The report is divided into three major sections: trade balance, imports and exports. It is further subdivided into country, world region and product groupings. This report is designed to provide a comprehensive look at the flow of auto parts into and out of the United States and to aid in identifying growing import competition as well as export trends. The Autoparts Report is a newsletter reporting on the trends and developments in the auto parts industry and markets. For further information about the auto parts trade report, call (301) 229-2077.