As the impact of shifting trade policy on the electronics sector remains to be fully seen, Descartes Datamyne has released it’s quarterly commodity report that contains detailed import and export data that shows the early effect of tariff changes.

In the first half of 2018, electronics accounted for 13.4% of total U.S. imports and 9% of exports. As U.S. policy is becoming more focused on reducing the nation’s trade deficit, the electronics sector remains the industry with the largest gap. Imports have amounted to a cumulative $187+ billion so far in 2018. With exports valued at $91+ billion, the trade deficit in the electronics sector is drawing close to reaching $100 billion in 2018. With the holiday season upon us, this deficit is not likely to get smaller.

In 2017, almost 62% of U.S. electronics imports came from China. Since that country is also a major buyer of U.S. electronics products, the ongoing U.S.-China trade dispute has the potential to significantly impact electronics imports/exports in the second half of 2018.

2018 Imports – Top Commodities

U.S. Electronics Imports

Modems, or machines for receiving, converting and transmitting voice, image and data (HS 85176200), are one of the largest electronics import so far in 2018, making up 18.8% of the total value of electronics imports. Import value dramatically rose in the third quarter compared to the first half of the year and has reached a cumulative 4.67% increase compared to 2017. Modem imports from China were up 5.5% in 2Q18 compared to 2Q17, while Mexican imports increased 11% and Malaysian imports showed a 32% decline.

Looking at the 7th ranked electronics import, color televisions (HS 852872), maritime imports went up almost 15% during the first half of 2018, reflecting a shift in manufacturing from Mexico to China. The increase is also due, in part, to a growing consumer preference for larger televisions, which require more shipping containers. Compared to 2Q17, 2Q18 containerized shipping value was down 3.5% while containerized shipping weight actually saw a 1% increase.

Among the top 25 electronics imports, 14th place video game consoles and machines (HS 95045000) grew the most, posting a 55% increase in 2Q18 versus 2Q17, with 62% year-over-year growth in the first half. Imports from China, the dominant player in this product category, were up almost 57% in 2Q18 versus 2Q17; Mexican imports went down 1%.

Diode imports (HS 85414060) fell 26% in 2Q18 compared to 2Q17, posting the largest drop of any top-ranked electronics product category. First-half results weren’t quite so extreme, with diode imports declining only 5% year-over-year. HS 854140 imports from Malaysia, South Korea and Vietnam decreased 41%, 47% and 43%, respectively, in 2Q18 versus 2Q17; Chinese imports went up by a modest 2% and Japanese imports increased 11%.

Parts and accessories for laser printers (HS 84439920), the 21st ranked product category, posted the largest first-half decrease, dropping 18.5% year-over-year. Imports from China, Japan and Malaysia all decreased slightly—3.5%, 0.7% and 1.4%, respectively—in the broader category (HS 844399).  In 2017-18, more than three quarters of HS 844399 imports originated in these three countries.

2018 Exports – Top Commodities

Electronic integrated circuits (HS 8542310000) tops the list of electronics exports, accounting for almost 13% of the total in the first half of 2018. China, the second largest market for U.S. processors, buys more products in this category than any other country in the world. In 2Q18, HS 854231 exports to China were up 19% over 2Q17 as the U.S. threatened to impose export controls. Industry executives say that Chinese companies have been shopping around for other suppliers in anticipation of this action.

The 15th ranked electronics export, storage units other than magnetic disk drive units (HS 8471709000), went up 72.5% in 2Q18 versus 2Q17, posting a year-over-year gain of 68% in the first half. Overall HS 847170 exports likewise increased in the first half of 2018, with exports to Mexico growing 50% and exports to Canada declining 12%. In 2017-18, exports to Mexico and Canada together accounted for 60% of the total in this category.

Cell phone exports (HS 851712) were a mixed bag in 2Q18. The 5th ranked product category, radio telephones for public cellular service, except for motor vehicles (HS 8517120050), experienced the largest decline of any electronics export, falling 35% compared to 2Q17 and 19% year-over-year in the first half. Exports of radio telephones for installation in cars (HS 8517120020) grew by 72% in 2Q18 compared to 2Q17.

In 2017-18, 55% of cell phone exports went to Hong Kong, UAE, Canada and China. Comparing the first half of 2018 with the same period in 2017, exports to China fell 68% while exports to Hong Kong and UAE went up 27% and 6%, respectively.

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