A trade deficit is when a country’s imports exceeds exports. In March 2021, the U.S. trade deficit hit its highest level in almost 30 years of $74.4 billion. The latest report from April of 2021, shows the deficit dropped to $68.9 billion which is a sign that the U.S. economy is beginning to recover from the shut downs in 2020. With that in mind, we wanted to examine the largest export industries in the U.S. and what to expect out of these industries moving forward.
Petroleum refining has seen consistent growth over the past few years with companies like Marathon and Exxon contributing to the increase. It is expected that this industry will continue to grow. However, public pressure for stricter environmental regulations and green power sources, continue to jeopardize the stability of this industry.
Oil Drilling and Gas Extraction ($85.5B)
The harvesting of the crude oil for petroleum refining is second largest export in the U.S. Where petroleum is the final product, oil drilling sets up the exploration and extraction. With crude oil still remaining one of the most widely available energy sources, this industry is expected to continue growing but faces the same challenges as petroleum.
Aircrafts, Engines, and Parts Manufacturing ($63.2B)
Due to lockdowns caused by COVID-19 the aircraft industry suffered significant losses in 2020. The airline industry is expected to have a good recovery over the next few years as older planes are switched out for newer and more fuel efficient models. As travel picks up in 2021, this industry will recover rapidly.
Automobile Manufacturing ($44.6B)
With record low unemployment rates leading into 2020, more people had disposable income to purchase vehicles. As unemployment rose during the pandemic, the auto exports fell. As more people return to work it was expected the automotive industry would recover. However, a global microchip shortage has slowed recovery for the automotive industry.
The pharmaceutical industry has seen consistent growth since 2020. And the COVID-19 vaccine is sure to have a profound impact on the industry—albeit largely still unknown how impactful it will be. Still the industry has its challenges. Public pressure for pharmaceutical companies to produce affordable medication and invest heavily into research and development continues to squeeze profit margins. This industry is also highly competitive. As more businesses enter the market and create more competition it is believed profits will be impacted.
Plastics and Resin ($37.6B)
Plastic products are involved in many other industries such as consumer goods and construction materials. This industry is expected to make a full recovery from where it was before COVID-19.
Organic Chemicals ($36.6B)
Unlike most of the industries on this list, organic chemicals have experienced consistent losses over the past few years. However, this industry has resilience due to diversification. Organic chemicals are used in a variety of markets such as beauty supplies, paper, and apparel. It is believed this industry will see slight growth moving forward due to pent-up demand from the reopening.
Natural Gas ($32.5B)
Although natural gas serves a similar function as petroleum as a fuel source, natural gas is extracted using a different process. Advanced technology has made harvesting natural gas easier and more efficient, which will boost this industry in the future.
Semiconductors and Circuits ($30.3B)
The semiconductor and circuit industry are responsible for producing many vital products in electronics such as memory chips and processors. Despite the microchip shortage across the world this industry continues to see growth through 2021 with no signs of slowing down.
Navigational Instruments ($28.4B)
To round out our list we have the navigational instruments industry which produces devices for industries that utilize GPS data in devices. Since the market for this industry is so diversified, it is more protected from fluctuations in the market. Like many of the industries on our list it is expected to see more growth as the economy recovers.
After over a year of lockdowns in 2020 we are beginning to see glimmers of an economic recovery. With the majority of industries expected to see growth this year we should also see significant improvements in the trade deficit as well.