2nd Quarter 2008

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tennessee monthly exports

tennessee's leading trade partners graph

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Tennessee International Trade Report

In the second quarter, Tennessee exports grew by more than $500 million. This amounts to a healthy 11.7 percent gain over the second quarter of last year. But once again, Tennessee’s performance paled compared to that of the nation. American exports were up 18.8 percent over this same period. If Tennessee’s foreign sales had grown as fast, the state would have earned an additional $380 million. In that light, the state’s figures don’t look quite as impressive.

The good news was provided by a variety of export industries that were able to leverage the cheap dollar into large gains throughout the world. The bad news came from only several sectors and was confined to but a few markets. Unfortunately, both the sectors and the markets were big ones.

Canada, Mexico, and China are Tennessee’s — and America’s — largest markets. In each, the state far underperformed the nation. U.S. exports to Canada grew more than 12 percent for the quarter. Tennessee’s were up 5.45 percent, from $1.561 to $1.646 billion. This was still one-fifth of the state’s total export gain for the quarter, but this rate of growth is substantially lower than that to which Tennessee has become accustomed. Laptop computers were at the heart of the state’s problems. Sales to Canada dropped $30 million for the quarter. Auto-related sales also could have been better. Car exports were up (especially at the end of the quarter, suggesting that we may soon see better news). But SUV sales were off (down from $44 to $32 million), and auto body parts fell as well. Because these products are the state’s largest exports to Canada, the very strong performance by other state exporters could not make up the difference. Exports of machinery, appliances, fabricated metals, and software were all up substantially. There would be little to complain about if computers and automobiles could return to something close to their export growth of two years ago.

Tennessee’s trade with Mexico remains overwhelmingly automotive-based. The slowdown in that sector cost the state heavily in the second quarter. Exports to Mexico actually declined ($618 to $611 million), while those of the United States advanced by 10 percent. The bad news was indeed all automotive. Transportation exports fell by $40 million, and shipments of aluminum alloy plates, destined for building cars and SUVS, fell by another $30 million. Just as with Canada, robust growth in other sectors, such as paper products and chemicals, could not compensate.