Computer chips are the No. 6 US export, at least at first glance.
At first glance, it even appears that the United States has a trade surplus when it comes to computer chips, which were at the center of the supply chain crisis during the height of the pandemic and are now at the center of the crisis. President Biden’s growing feud. with China as an import rather than an export, computer chips rank No. 10.
Also at first glance, it seems that Mexico is the number one buyer of computer chips from the United States.
But, there is more to the story.
The story gets a little more interesting when you remove those computer chips that are actually manufactured outside of the United States, imported, and then exported.
Computer chips are no longer in sixth place, there is no longer a trade surplus for computer chips, and Mexico is no longer in first place. China does it.
This publication is the eighth in a series of columns on the nation’s exports.
Follows a similar series I did for the countries that were, at the time, the nation’s top 10 trading partners and one for the airports, seaports, and border crossings that were, at the time, the nation’s top 10 “ports.” nation.
The first article in this series focused on an overview of the top 10 exports. The second looked at the top 10 countries that are markets for US exports and how they differ from our trading partners in general, which would include imports.
The third was on refined oil, the main export; followed by one on oil, which ranks second; natural gas, which includes LNG and ranks third; the main category of commercial aircraft, which ranks fourth; and passenger vehicles, at number 5.
Items 9-12 will discuss plasma and vaccines No. 7, motor vehicle parts No. 8, pill-form drugs No. 9 and medical instruments No. 10.
Let’s go back to computer chips.
For the first time, more than half the value of US computer chip “exports” this year were actually imported, in other words, manufactured outside the United States, and then “re-exported,” according to the latest data from the US Census Bureau. The national average is just 15.33% through August.
While it makes sense from an accounting standpoint, or perhaps accountability, foreign-made computer chips did, in fact, leave the country, the $34.39 billion in “exports” of computer chips computer this year would drop $17.94 billion to rank not No.6 but No.16, with a value between that of soybeans and that of corn, without those re-exports.
The trade surplus of $5.54 billion would also vanish.
In fact, among more than 1,200 different export categories at the four-digit level in the harmonized tariff code system, computer chips rank No. 1 for the highest value of so-called “foreign exports,” as they are called. .
Even those that are not counted as foreign exports would include computer chips that are imported, even into a foreign trade zone, and then modified or upgraded before being exported. Those are called “domestic exports”, which many people would think is really an export.
So where do all those re-exported computer chips and “domestic” computer chips go? Largely, Mexico, to feed the automotive sector and other manufactured products such as refrigerators, computer monitors, cell phones and related equipment, hard drives, and televisions.
But take away those “re-exports” and Mexico is no longer number 1, as mentioned above. That would be China, the country at the center of the dispute with President Biden.
As of August, the top five buyers of “domestic” computer chips are China, with $4.38 billion of the $16.45 billion total, followed by Taiwan with $2.62 billion, Malaysia with $2, 06 billion and South Korea with $1.04 billion. Unfortunately, Mexico is fifth, with $996.88 million.