US exports are growing but will they continue to rise with a strengthening dollar and weakening GDP growth among trade partners? For the last five years there has been a gradual strengthening of US exports. Considering the level of US imports, it’s hard to believe but the United States is the world’s third largest exporter with the important caveat that exports represent only 13% (2013) of the nation’s GDP. It’s for this reason that the US runs at a trade deficit although it can be argued that in the case of consumer goods, the US is the largest beneficiary of the process. For example, who is the greatest beneficiary of iPhone exports to the US, Apple (shareholders) and the US consumer or the factory in China? The same argument can be made for most footwear and apparel imports. Still, the US exports in many cases are notable because of just how unremarkable the commodity is. Recycled paper, fibers, scrap metals and now used electronics are a huge (and heavy) business. American Chung Nam is frequently cited as largest exporter via container (around 400,000 teus) in the US. Recyclers like Potential Industries, Harmon Recycle and Newport are just a few of the larger players in the recycle export business that helps fill many an export container. Countries like China and Turkey are major importers of US recycles. But these commodities are highly price sensitive, and a strong dollar could derail these export items. Agricultural goods like soybeans, cotton or grains are also export items that are at once heavy (weighing out rather than cubing) and price sensitive. There is a peculiar yin and yang to the agricultural sector as the commodities can be shipped either in a container or as bulk/break bulk depending on transportation costs. The business also shifts with domestic demand and changes in crop plantings. One year might be heavy on soybeans while another on corn or cotton. Further complicating export forecasting is the strength of global crops, “local” demand and geo-politics. For example, how does the Ukraine situation impact global grain shipments? Other farm products such as beef, poultry, dairy products and (fresh produce) fruits and vegetables are major exports but subject to approval processes that often delay or block exports. Recently China blocked US exports of hay containing genetically modified ingredients (trace amounts). On the other hand, dairy product exports, especially milk, are up as China’s emerging middle class tastes demand new products. However, the Chinese still need to build the wide scale infrastructure to bring chilled dairy products to the table. Like many other US products, competition and pricing play a big role in whether these exports hit the table in China, Japan or South Korea. Despite the challenges there are a lot of notable winners in the export markets. Recently, the Distilled Spirits Council released figures that said that bourbon and whiskey exports topped $1.02 billion in 2014. Another export winner is cow tongue, which with the easing of beef restrictions boomed in 2014, up a reported 150% over 2013. It is the unexpected commodities like cow tongue – worth around a half a buck a pound in the US and $8 per pound in Japan - that drive US businesses to finding just the right product to export. Although somewhat downplayed, the US remains a major exporter of machinery/engines, electronic equipment and chemicals besides the agribusiness. The biggest piece of machinery the US regularly exports is aircraft ($115 billion plus) and aircraft parts. Boeing, arguably the largest US exporter by dollar amount, has the advantage of built-in product delivery. Will US Exports Grow? Euler Hermes, a provider of credit insurance, recently released a report (Economic Insight Report) on the prospects for US export growth. The firm believes that US exports will grow by $88 billion or 5% in 2015, despite predictions of minimal global GDP growth and a rising US dollar. Dan North, senior economist for Euler Hermes said “While the global economy is set to enter its fourth straight year of lackluster growth, the US economy continues to grow and many of our industrial sectors are showing strength here and abroad.” The report believes the biggest exports gains will be garnered in China and the NAFTA trade partners, along with South Korea and ASEAN. Euler Hermes believes the greatest export gains will come from agribusiness, chemicals, energy and mechanical sectors. Conversely, textiles and ferrous metals are expected to show the smallest increases.