2nd Quarter 2018

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Tennessee Trade Report

by Steven G. Livingston | 1 | 2 | 3 | 4 |
Tennessee shipments to Canada dropped almost $400 million for the quarter, a 15 percent loss in the state's largest market.

Tennessee exports rose to $8.526 billion in the second quarter, a gain of $86 million over the second quarter of 2017. Comparatively, this was a weak performance. The state's 1 percent growth compares unfavorably with America's 11.2 percent growth over this same period. Indeed, Tennessee ranked 43rd among the American states in its export performance. The reason for this can be summed up in one word: Canada. Tennessee shipments to Canada dropped almost $400 million for the quarter, a 15 percent loss in the state's largest market. Without Canada, the quarter's exports would be roughly in line with the rest of the U.S.

So what happened in Canada? Large declines in automotive and computer shipments. The export of cars fell from $468 million to $374 million. A number of automotive goods also suffered steep declines, auto engines in particular (down almost $100 million). If cars were bad, computers were worse. Computer shipments to Canada dropped from $284 million to $51 million, a loss of more than $200 million. As we noted in the last quarterly report, this is due to supply chain changes, and the state's export statistics are going to reflect this for the next several quarters. Nevertheless, it places quite a drag on the state's export numbers. Several other products also performed poorly last quarter in Canada, notably TV equipment and DVD sales. A single bright spot was the continued growth in electric vehicle exports. These were up almost 40 million. But the bottom line was a loss of $376 million in state exports to Canada.

Fortunately the rest of the world proved a much better market. State exports, excluding Canada, were up 7.6 percent. The quarter's good news begins south of the border. Shipments to Mexico were up over 6 percent (to $1.268 billion). South America purchased 9 percent more Tennessee goods than in 2017. The state survived a modest drop in sales to Brazil because of solid gains in Colombia and Peru. As might be expected, exports to Venezuela have all but vanished. Tennessee once exported 7 to 8 million dollars in goods per month to Venezuela. That total is now well below $100,000.

A surge in car exports to Saudi Arabia and the United Arab Emirates led the Arabian Gulf to the top of Tennessee's export destinations. Shipments to this region gained 53 percent over the previous year. Thanks to cotton, exports to nearby Turkey and Pakistan also grew substantially.