EsTaiwan’s exports climbed 12.4% on a year earlier in July, according to preliminary official data. That was well ahead of the 8.9% expected by economists according to Reuters. Exports to mainland China led the way, rising 17.9% on a year earlier, though when including Hong Kong the growth was a more moderate 11.6%. Among major customer markets the fastest growth rate was seen in the U.S., which expanded 18.6%. That was the fastest rate since August 2011.
Source: Panjiva
The timing was unfortunate in following recent talks between the U.S. and Taiwanese government, as outlined in Panjiva research of July 27, and given the U.S. policy preoccupation with the trade deficit. A disparity in trade growth is relatively recent, with exports over the past 12 months growing 7.3% vs. imports’ 1.6% expansion and resulting in a trade surplus of $5.88 billion annualized. Over the past five years exports have grown just 0.9% annually vs. 2.2% for imports from the U.S.
Source: Panjiva
Putting aside the vagaries of the smartphone product cycles, cutting the surplus will prove complex. The delayed U.S. review of the steel industry may target Taiwanese steel exports. These are equivalent to $3.0 billion, or 7.4% of the total, Panjiva data shows.
Increasing U.S. exports will be difficult. Panjiva analysis of the top 500 U.S. export lines to Taiwan shows they are dominated by arms and aerospace at 10.82% and 2.54% of the total respectively. The U.S. also exported $2.88 billion of semiconductor fabricating equipment to Taiwan in the past 12 months.
One potential area of growth is in pharmaceuticals. These accounted for 0.39% of U.S. exports to Taiwan vs. 1.6% of U.S. exports globally. Put another way, there may be the potential to increase exports four-fold, or $310 million.
Source: Panjiva
