Computer chips are the #6 ranked US export – but are they really?
Computer chips are the No. 6 ranked US export – at first glance anyway.
At first glance, it even appears that the United States has a trade surplus in computer chips, which were at the center of the supply chain crisis at the height of the pandemic and are now at the center of the crisis. escalation of President Biden. with China. As an import rather than an export, computer chips rank 10th.
Also at first glance, it appears that Mexico is the number one buyer of US computer chips.
But, there is more to the story.
The story gets a little more interesting when you strip out those computer chips that are actually made outside of the US, imported and then exported.
Computer chips no longer rank sixth, there is no longer a trade surplus in computer chips, and Mexico no longer ranks first. China does.
This post is the eighth in a series of articles on the country’s exports.
It follows a similar series I did for the countries that were, at the time, the country’s top 10 trading partners and one for airports, seaports and border crossings which were, at the time, the top 10 “ports” of the country.
The first article in this series focused on a overview of the top 10 exports. The second looked top 10 countries that are markets for US exports and how they differ from our global trading partners, which would include imports.
The third concerned refined petroleum, the first export; followed by a oilwho ranks second; natural gas, which includes LNG and ranks third; the primary commercial jet category, which ranks fourth; and passenger vehiclesat number 5.
The ninth through twelfth articles will cover #7 plasma and vaccines, #8 motor vehicle parts, #9 drugs in pill form, and #10 medical devices.
Back to computer chips.
For the first time, more than half of the value of US computer chip ‘exports’ this year were actually imported – in other words, manufactured outside the US – and then ‘re-exported’, according to the latest. US Census Bureau data. The national average is only 15.33% until August.
While that makes sense from an accounting standpoint, or perhaps from a liability standpoint – the foreign-made computer chips have in fact left the country – the $34.39 billion in “exports” of computer chips this year would drop $17.94 billion to rank not No. 6 but No. 16, with a value between that of soybeans and corn, without these re-exports.
The trade surplus of $5.54 billion would also disappear.
In fact, among more than 1,200 different export categories at the four-digit level of the Harmonized Tariff Code System, computer chips rank first in the highest value of so-called “foreign exports”, as they are call.
Even those not counted as foreign exports would include computer chips that are imported, including into a free zone, then modified or upgraded before being exported. It’s called “domestic exports”, which is what many people would think an export really is.
So where do all these re-exported computer chips and “domestic” computer chips go? Largely Mexico, to supply the automotive sector and other manufactured goods such as refrigerators, computer monitors, cell phones and related equipment, hard drives and televisions.
But take out these “re-exports” and Mexico is no longer No. 1, as mentioned above. That would be China, the country at the center of the feud with President Biden.
Through August, the top five buyers of “domestic” computer chips are China, with $4.38 billion out of a total of $16.45 billion, followed by Taiwan with $2.62 billion, Malaysia with $2.06 billion and South Korea with $1.04 billion. Alas, Mexico is fifth, with $996.88 million.