Industrial Machinery to Drive U.S. Export Growth
February 28, 2013
Industrial machinery is expected to become the top driver of U.S. export and import trade over the next several years, as global demand for advanced equipment continues to grow, particularly in emerging markets. Worldwide demand for high-quality U.S.-made machinery and equipment is rapidly increasing, and new research indicates that machinery exports will dominate trade in the near-term future and throughout the next decade. In addition, the ongoing boom in shale gas is poised to shift the energy trade balance in America's favor. According to the latest HSBC Commercial Banking Trade Forecast In the long-term, industrial machinery is forecast to increase to 25 percent of U.S. export growth between 2016 and 2020, and to 26 percent from 2021 to 2030. Machinery will also play a significant role in import rates, accounting for 25 percent of U.S. imports from 2013 to 2015, before declining to a 22 percent share between 2016 and 2020, and 23 percent from 2021 to 2030. Other key sectors expected to add high export value include transportation equipment, which is forecast to rise to 17 percent of U.S. export growth through 2015, and medical and measuring equipment, which will account for 7 percent of export growth in the next two years. Combined with industrial machinery, these categories will be responsible for more than half the export gains between 2021 and 2030. In terms of overall U.S. trade patterns, the report predicts that total American export growth will slow to 2.2 percent this year, before rising to 3.9 percent in 2014. Likewise, imports will drop to 1.3 percent growth in 2013, before rebounding to 2.7 percent in 2014. Emerging markets will play a major role in reshaping the global trade network over the next several decades, and American manufacturers will need to identify which international markets to target to achieve a competitive advantage. "China and other emerging markets are expanding their operations into new, higher value sectors, which is prompting the more developed markets, including the U.S., to specialize and diversify," Prabhat Vira, U.S. regional head of trade and receivables finance for HSBC, said in an announcement of the results Although the top three markets for U.S. exports will continue to be Canada, Mexico, and China, the fastest export gains over the next several years are expected to be in the United Arab Emirates, India, and Vietnam. Developing stronger trade ties with traditional and new markets will require U.S. manufacturers to focus more on advanced production and innovation. "Facing competition from lower-cost producers in the emerging markets, exporters from the advanced economies would need to increasingly focus on high-technology sectors, where they can still command a competitive advantage," the Financial Times America's rapidly growing energy supply is also expected to have a make a significant impact on trade flow. "Another major influence on trade balances will be the extent of the energy revival occurring in the United States," HSBC notes. "Due to the advent of hydraulic fracturing technology, shale gas and oil exploitation in the U.S. increased dramatically over the past 10 years, with some forecasters expecting the country to become energy self-sufficient in 2030." If the prediction about energy independence within the next two decades holds true, trade flows for petroleum products to the U.S. will likely be reversed, enabling America to dramatically reduce its energy imports and potentially become a net exporter of energy products.