Transportation Equipment

Changes in 2020 from 2019:

• U.S. total exports of transportation equipment: Decreased by $96.9 billion (28.5 percent) to $243.0 billion
  • U.S. domestic exports of transportation equipment: Decreased by $85.2 billion (28.3 percent) to $216.3 billion
  • U.S. re-exports of transportation equipment: Decreased by $11.8 billion (30.6 percent) to $26.8 billion
• U.S. general imports of transportation equipment: Decreased by $89.0 billion (18.9 percent) to $382.5 billion

The value of U.S. domestic exports of transportation equipment^[1] totaled $216.3 billion in 2020, down $85.2 billion (28.3 percent) from 2019.^[2] The transportation equipment sector recorded the largest drop across the 10 merchandise sectors covered in this report, accounting for 44.5 percent of the total decline in exports from 2019–20. U.S. transportation equipment exports to all leading markets also declined. Canada, Mexico, Germany, and China, which were the top four destinations for U.S. exports of transportation equipment in 2020, accounted for $110.6 billion (45.5 percent) of U.S. exports (table TE.1).^[3] Due to a larger decline in exports to China, Germany became the third-largest market for U.S. transportation equipment in 2020, while China dropped to fourth. Decreases in exports of transportation equipment, by value, were led by aircraft, spacecraft, and related equipment, followed by motor vehicles, and certain motor vehicles parts (table TE.1).

The value of U.S. general imports of transportation equipment totaled $382.5 billion in 2020, dropping $89.0 billion (18.9 percent) from 2019. The transportation equipment sector recorded the largest absolute decline across the 10 merchandise sectors covered in this report, accounting for 56.4 percent of the total decline of imports from 2019–20. U.S. transportation equipment imports declined from all leading suppliers. Mexico, Japan, and Canada, which were the three largest U.S. suppliers of transportation equipment in 2020, accounted for $222.2 billion (58.1 percent) of U.S. imports.^[4] Due to a larger decline in imports from Canada, Japan became the second-largest supplier to the United States of transportation equipment in 2020, while Canada dropped to third. Motor vehicles accounted for nearly half (49.4 percent) of the decline in imports from 2019 to 2020. Primary cells and batteries and electric storage batteries and powersport vehicles were the only two digests that experienced increases in imports in 2020 (table TE.2).^[5]

The transportation equipment sector experienced large declines in both exports and imports in 2020, and these declines are likely a result of both supply and demand factors related to the COVID-19 pandemic. On the demand side, pandemic-related lockdowns led to sharply lower business and consumer demand for products of certain sector digests, particularly motor vehicles and aircraft. On the supply side, closed factories and various lockdown periods had far-ranging impacts, some of which continued into 2021. Even after factories reopened and production resumed, many transportation industries faced shortages of key inputs because of pandemic-related transportation and supply chain disruptions.^[6]

U.S. Domestic Exports

U.S. transportation equipment exports decreased in value across all digests from 2019 to 2020. The largest decline in value, accounting for more than half of the overall decline, was the aircraft digest, which fell $48.7 billion. The second-largest decline was motor vehicles (which decreased by $14.3 billion), followed by motor vehicle parts, internal combustion piston engines, and construction and mining equipment (table TE.1).

U.S. exports of aircraft, spacecraft, and related equipment (the largest transportation equipment digest, by value) declined 41.2 percent, from $118.2 billion in 2019 to $69.5 billion in 2020 (table TE.1). The largest five export destinations for the aircraft digest in 2020 were Germany ($6.5 billion), France ($6.1 billion), Canada ($5.8 billion), United Kingdom ($5.3 billion), and Japan ($4.6 billion). China fell from the second-largest export destination to the sixth largest in 2020, with exports to China declining $5.9 billion (59.7 percent). This 2020 decline followed a 2019 decline in exports ($5.8 billion or 4.7 percent), a year in which Boeing cut its 737 Max production by 20 percent following two crashes in Indonesia and Ethiopia in 2018 and 2019 respectively, leading to civilian aviation authorities around the world suspending certification of the aircraft.^[7] This cut in production was furthered in December 2019 when Boeing announced that it would temporarily shut down 737 Max production in January 2020 while the crashes underwent further investigation.^[8] These problems were compounded by the sharp drop in demand for air travel during 2020 due to the pandemic, causing airlines around the world to cancel flights and cancel or delay orders for new aircraft.^[9] Moreover, Boeing suffered further problems in the latter half of 2020, as inspections stemming from production problems delayed deliveries of the company’s 787 Dreamliner aircraft.^[10] In total, Boeing delivered only 157 aircraft in 2020, the lowest in 43 years and nearly 60 percent fewer than in 2019.^[11]

U.S. exports of motor vehicles, certain motor vehicle parts, and internal combustion piston engines were three of the top four transportation equipment digests in terms of U.S. exports by value. Exports of motor vehicles declined by $14.3 billion (19.3 percent), decreasing from $73.9 billion in 2019 to $59.7 billion in 2020, and this decline is due to a sharp decrease in production and sales of U.S. light vehicles in 2020.^[12] Canada continued to be the largest market for U.S. motor vehicle exports, as it has been since 2016. In 2020, U.S. exports to Canada were $22.6 billion (37.8 percent), followed by Germany ($6.7 billion or 11.3 percent). Exports to Canada decreased by $7.6 billion (25.3 percent), from $30.2 billion in 2019 to $22.6 billion in 2020. The decrease in the value of exports to Canada accounted for 53.5 percent of the total decline of exports of motor vehicles (table TE.1).

U.S. motor vehicle production and sales paralleled the decline in global sales. U.S. light vehicle production declined by nearly 68.5 percent year-over-year during March-May 2020 as a result of vehicle and parts producers largely shutting down their U.S. production facilities during this period.^[13] In April, domestic production of motor vehicles was down nearly 99.2 percent compared to April 2019.^[14] Production resumed in the second half of the year as COVID-19 restrictions were lifted and demand for vehicles rebounded, but the earlier disruptions left dealers without vehicles needed to satisfy consumer demand, and vehicle producers raced to boost production. Shortages of motor vehicle parts, however, hampered plans to quickly increase production.^[15] In total, U.S. vehicle production dropped by 22.7 percent in 2020, which was a larger decline than the global average of 16 percent.^[16] U.S. vehicle sales also declined 15.2 percent year-over-year, from about 17 million sales in 2019 to 14 million in 2020.^[17]

U.S. exports of the certain motor vehicle parts digest experienced the third-largest decrease in 2020, declining by $8.7 billion (22.6 percent) from $38.2 billion in 2019 to $29.6 billion in 2020. Moreover, U.S. exports of internal combustion piston engines, other than for aircraft (the fourth transportation equipment digest, by value) declined by $3.3 billion (16.0 percent), from $20.7 billion in 2019 to $17.4 billion in 2020 (table TE.1). For both digests, the leading destinations of exports were Mexico, Canada, and China. For Canada and Mexico, in addition to shared borders, which lower trade costs, the size of automotive trade between United States, Canada, and Mexico mainly stems from the deep integration of the North American automotive supply chain.^[18] China, as the world’s largest vehicle manufacturer, is the third-largest destination, after Canada and Mexico, for U.S. exports of certain motor vehicle parts and internal combustion piston engines, other than for aircraft. All of the previously mentioned factors negatively impacting the motor vehicle industry have spillover effects for motor vehicle parts as well, which caused total demand for motor vehicle parts to decline significantly compared to previous years.^[19]

U.S. exports of construction and mining equipment declined by $3.6 billion (25.1 percent), from $14.3 billion in 2019 to $10.7 billion in 2020.^[20] Canada was the leading export destination of U.S. construction and mining equipment at $2.7 billion in exports, followed by Australia ($1.5 billion) and Mexico ($1.0 billion). U.S. exports of qualifying construction and mining equipment enter Canada, Mexico, and Australia duty free under free trade agreements between the United States and these countries.^[21] While U.S. exports of construction and mining equipment to Canada and Mexico declined, U.S. exports of such equipment to Australia rose by $180.5 million in 2020. Even though the COVID-19 pandemic resulted in decreased production in many industries, Australia’s mining sector was less impacted by lockdown measures due to the geographic isolation and mining working sites in remote areas.^[22] Australia’s mining sector, the largest sector by share of total Australian national GDP, was declared by the Australian government as an essential industry.^[23] These factors, as well as newly discovered mineral deposits, likely bolstered demand for such equipment.^[24]

U.S. General Imports

U.S. imports of transportation equipment declined by $89.0 billion (18.9 percent) in 2020, totaling $382.5 billion. The largest declines in the transportation equipment sector occurred in the motor vehicles digest (down $44.0 billion), certain motor vehicle parts (down $12.6 billion), and aircraft engines and gas turbines (down $11.0 billion). Imports increased in only two transportation digests in 2020: primary cells and batteries and electric storage batteries (up $1.3 billion); and powersport vehicles (up $223 million) (table TE.2).

U.S. imports of motor vehicles (the largest transportation equipment digest, by value) fell 20.2 percent, from $217.5 billion in 2019 to $173.5 billion in 2020. This decline accounted for nearly half (49.4 percent) of the total decline in the imports of transportation equipment. Before 2020, imports of motor vehicles had increased steadily from $200.7 billion in 2016 to $217.5 billion in 2019. Mexico was the leading source of U.S. motor vehicle imports in 2020, accounting for $56.8 billion (32.9 percent) of the total, followed by Japan ($32.6 billion or 18.9 percent), and Canada ($31.4 billion or 18.2 percent). In 2020, U.S. motor vehicle imports fell from Mexico by $14.8 billion (20.7 percent), Japan by $7.3 billion (18.3 percent), and Canada by $11.4 billion (26.6 percent). These top three suppliers accounted for 69.6 percent of U.S. total motor vehicle imports, and for 76.4 percent of the decline in 2020.

Similar to exports, the decline in U.S. imports of motor vehicles was due to the sharp drop in demand amid the COVID-19 outbreak as well as the temporary halting of global motor vehicle production and later parts shortages.^[25] For the month of April 2020, year-to-date imports were down $10.4 billion for light vehicles compared with April 2019, and imports in the month of May 2020 alone were down $13.9 billion compared to the previous year.^[26] Even as production began to resume in mid-May 2020, automakers experienced various other challenges throughout the year. These challenges included various parts shortages and, more so later in the year, the global semiconductor chip shortage which caused multiple automotive manufacturers to halt or slow vehicle production near the end of the year and into 2021.^[27]

The motor vehicle parts digest experienced the second largest decrease with U.S. imports of these products declining $12.6 billion (14.2 percent), from $88.7 billion in 2019 to $76.1 billion in 2020. Mexico supplied $34.4 billion (45.2 percent) of these imports in 2020, followed by China ($8.9 billion or 11.7 percent) and Canada ($8.4 billion or 11.1 percent). U.S. imports of these goods decreased from all three of these countries: those from Mexico decreased by $5.4 billion (13.5 percent), from China $1.6 billion (15.3 percent), and from Canada, by $1.5 billion (15.5 percent). In April, year-to-date imports of motor vehicle parts were down $6.9 billion compared with 2019 and imports in the month of May alone were down $8.7 billion compared to the previous year.^[28] Total motor vehicle production in United States was down 22.7 percent.^[29]

The decline in U.S. imports in the aircraft engines and gas turbines digest and the aircraft, spacecraft, and related equipment digest were the third and fourth largest declines, respectively. U.S. imports of aircraft engines and gas turbines decreased by $11.0 billion (35.5 percent), from $30.9 billion in 2019 to $19.9 billion in 2020. Similarly, imports of the aircraft digest declined $7.5 billion (20.8 percent), from $35.9 billion in 2019 to $28.5 billion in 2020. France and Canada were the two leading sources of imports for both digests, accounting for 31.4 percent ($6.3 billion) of the total imports of aircraft engine and gas turbines in 2020, and 48.6 percent ($13.8 billion) of the total import in the aircraft digest. These declines in imports were due to fewer orders and deferrals of deliveries of new airplanes on the part of airlines, due to lower demand for air travel during the COVID-19 pandemic.^[30] The tariffs imposed under section 301 of the Trade Act of 1974 on new aircraft from France, Germany, Spain, and the United Kingdom were also likely a contributing factor to the total decline of aircraft imports. U.S. imports of used aircraft, which were not included in the section 301 tariffs, almost doubled from $3.5 billion in 2019 to $6.8 billion in 2020 (even though the larger digest had a significant decrease).^[31] Added to the reduced deliveries due to the pandemic, lower production levels at Boeing and Airbus also played a role on why downstream suppliers were importing fewer aircraft engines.^[32]

The two digests in the transportation equipment sector that had an increase in imports (the batteries and the powersport vehicles digests) from 2019 to 2020, accounted for a combined value of $16.7 billion in imports (4.4 percent of total imports) in 2020. U.S. imports in the batteries digest accounted for most of this increase. Such imports increased 14.6 percent, from $9.1 billion in 2019 to $10.5 billion in 2020. This increase continued a steady uptick in battery imports in recent years, as imports in this digest have increased by 70.0 percent since 2016 (from $6.2 billion in 2016 to $10.5 billion in 2020) (table TE.2). Imports of lithium-ion batteries were the largest imported product within this digest, increasing from $3.6 billion in 2019 to $4.8 billion in 2020, by value (this increase accounted for 83.6 percent of the total increase within the digest).^[33] China was the leading source of imports in the batteries digest, accounting for $2.9 billion, followed by Japan ($1.9 billion), South Korea ($1.5 billion), and Mexico ($1.3 billion). The top four leading sources of imports, in 2020, account for 71.8 percent of the total imports in this digest.

U.S. imports of powersport vehicles was the other transportation digest that saw an increase in imports in 2020, increasing 3.7 percent from $6.0 billion in 2019 to $6.2 billion in 2020. These imports have also been on the rise in recent years, having increased 43.1 percent since 2016 (from $4.3 billion in 2016 to $6.2 billion in 2020). However, powersport vehicle sales, especially for off-highway motorcycles, increased sharply in 2020 as popularity for outdoor activities increased during the year in response to the pandemic.^[34] Off-highway motorcycles sales rose by 46.5 percent year-over-year, while sales of all-terrain vehicles (ATVs), also known as quad bikes, jumped 33.8 percent.^[35] Furthermore, more than half of all global sales of ATVs are in North America.^[36] Mexico was the leading source of U.S. powersport vehicle imports, accounting for $1.9 billion (31.2 percent) of total imports, followed by China ($1.3 billion or 21.4 percent).

 

 

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