Perc Pineda, Ph.D.

Chief Economist

After many years of an annual trade surplus, U.S. plastics trade experienced a deficit in 2020, as the global economy slowed due to the COVID-19 pandemic.

Based on foreign trade statistics from the U.S. International Trade Commission, the dollar value of U.S. plastics industry exports—resin, plastics products, machinery and molds for plastics—totaled $57.8 billion and imports totaled $60.3 billion, resulting in a $2.4 billion trade deficit. The dollar value of U.S. plastics industry exports and imports fell by 8.2% and 3.5%, respectively, from a year earlier (the 2019 U.S. plastics industry trade surplus was $554.98 million).

FALLING RESINS PRICES LARGELY RESPONSIBLE

While the U.S. plastics industry maintained a trade surplus in resins last year, the $18.6 billion surplus fell short of covering the overall $21.0 billion combined deficit in plastics products, machinery, and molds for plastics trade. As shown in the table below, plastics products trade showed the largest deficit:

The lower plastics trade dollar value in 2020 could be explained by changes in prices, a weaker U.S. dollar and the pandemic-related global economic slowdown. The volume of U.S. resin exports, for instance, fell by only 0.5% from 21.4 billion kgs in 2019 to 21.3 billion kgs in 2020. But the meager decrease in the volume of resin exports translated to a 9.1% decrease in dollar value, reflecting lower resin export prices in 2020, particularly from May through August, compared to 2019. At a worth of $32.3 billion, those 21.3 billion kgs of resin exports converted to $1.52/kg, which was lower than the $1.66/kg in 2019.

EXPORT VOLUMES ROSE FOR VALUE-ADDED PRODUCTS

Price shifts and a weaker U.S. dollar also affected the product mix of trade, as lower prices increased exports of high-value-added products. The volume of equipment and parts exports increased 43.0%, but in dollar value exports fell 13.9% last year from the previous year due to lower plastics machinery and parts export prices.

Imports of plastics equipment and parts fell 6.4% in dollar value and 14.1% in volume. The weaker U.S. dollar made the prices of imports higher—particularly high-value-added equipment. Exports of plastics products fell 6.9% in dollar value and 16.1% in volume. While a weaker U.S. dollar makes U.S. exports price-competitive, a pullback in economic activity resulted in lower imports of U.S. plastic products abroad.

Exports of molds for plastics in 2020 increased in dollar value and quantity by 1.0% and 1.3%, respectively, from 2019. The U.S. dollar/unit export price of molds last year was 0.3% lower than the year earlier. An increase in quantity exports, given a marginal change in price, explains the increase in exports—both in value and quantity. However, weaker economic activity compared to 2019 and a weaker U.S. dollar explain lower imports—12.9% in dollar value and 9.3% in volume.

WTO PREDICTED BIGGER DROPS

Mexico, Canada, China, Belgium and Brazil remained the top five export markets of the U.S. plastics industry last year based on U.S. dollar value of exports. Although exports to USMCA partners—Canada and Mexico—fell 11.0% and 6.0%, respectively, from 2019, the U.S. still had a trade surplus with Mexico and Canada. While the U.S. trade surplus with Mexico decreased from $9.8 billion in 2019 to $8.6 billion in 2020, the trade surplus with Canada increased from $0.5 million to $9.3 billion over the same period. Exports to China, the third largest market, increased 8.0% and exports to Belgium and Brazil decreased 18.0% and 3.0%, respectively. The U.S. plastics trade deficit with China last year was $13.8 billion, which was 1.1% lower than the previous year.

This preliminary analysis could change depending on the June annual trade data revisions from U.S. Census Bureau. The forthcoming 2021 Global Trends Report—PLASTICS’ flagship publication on the U.S. plastics trade—will reflect the revisions. For now, the U.S. plastics trade in 2020 was a mixed bag.

The trade deficit is consistent with PLASTICS’ forecast at last year’s Global Plastics Summit. If it is any consolation, the decline in U.S. plastics trade was less than the World Trade Organization’s projection that merchandise trade would decrease 13% to 32% in 2020. The International Monetary Fund expects the world trade volume in goods and services to increase 8.1% this year.