#22 – Inside Our Industry – Why Are Imports Drastically Changing?Posted on
Thomas Insights recently posted an analysis of trade data and insights into the future of the manufacturing sector. As the article noted, “Imports fluctuate. The manufacturing industry is well aware of this fact. However, 2020 has taken everyone by surprise. Imports into the United States have had to deal with a lot, from pandemics to uncertain government elections. These trends are important to understand as companies need to plan for 2021 and beyond.” We are including a portion of the article below. You can find the full story along with additional charts here.
Why Are Imports Drastically Changing?
There are a number of factors at play that have dramatically changed the import landscape in the United States. In our lifetime, we will likely never see such a drastic change in imports from year-over-year again. The overall trends continue to point to imports increasing, but there were some exceptions in the first half of 2020.
COVID-19 – Unsurprisingly, COVID-19 may have had the biggest impact on imports from 2019 to 2020. Imports changed widely as the world dealt with its first widespread pandemic in more than 100 years. The effects of the pandemic on imports may be felt for years to come.
Medical Needs – The need for PPE (Personal Protective Equipment) and medications drove much of the increased China imports seen in the second quarter of 2020. China is dominant when it comes to the medical supplies market. The country manufactures more medical supplies than the rest of the world combined, according to the The New York Times.
This dominance led to an incredible increase in masks and medical supplies imports from China. The United States needed these products, and China had a strong hold of the production. Medical imports will likely hold steady in Q3 2020 as COVID-19 still persists.
Less Driving – There have been many unexpected impacts on imports from the economy shutting down and stay-at-home orders. With more people being forced to stay home, there were fewer people on the road. The result was a dramatic drop in automotive-related imports. Everything from tires to axles had less demand.
Look for automotive imports to rise dramatically in the third quarter of 2020 as the economy has reopened, people have gone back to work and school, and there was more domestic traveling. We’ve already seen there was an increase of 19% in the number of U.S. travelers this year as U.S. citizens are barred from entering many countries around the world. This means more domestic travel via road tips, which should translate into increased Q3 2020 automotive imports.
Keeping Children Engaged and Entertained – Frustrated parents dealing with bored children at home had an impact on toy imports. With traditional children’s entertainment, such as movie theaters, shut down, parents were looking for anything they could use to keep their children entertained through the long days stuck at home. The result was toy imports more than doubling in just a year. It remains to be seen what will happen to toy imports in the third quarter of 2020.
Forging, Casting, and Stamping Goods Imports Down Overall – COVID-19 had a broad impact on imports on goods made from casting, forging, and stamping.
China had to shut down many factories in the first quarter of 2020, which resulted in the drop in imports. In the second quarter of 2020, orders from United States customers were delayed or canceled as the U.S. economy shuttered. COVID-19 decreased goods manufactured from these methods for the first half of 2020. Third quarter 2020 import data may show a substantial increase in imported products manufactured using these methods.