Re-globalization and Its Implications for Miami

Newest additions to the list are Costa Rica and India. Markets to watch are Malaysia and Turkey.  Both have shown some interesting growth over the past several years.  Last year trade with Turkey slowed, likely due to geopolitical reasons.

 Near term headwinds and tailwinds to lookout for:

A record number of voters are expected to participate in national elections across at least 64 countries, including the European Union and six Latin American nations: El Salvador, Panama, the Dominican Republic, Mexico, Venezuela, and Uruguay. All together, these regions represent around 49% of the global population, and the election outcomes could affect future trade patterns.

Changes in what is traded are also noteworthy, with many shifts driven by policy. For instance, global climate commitments are on the rise. The Biden administration’s recent announcement of new automobile emissions standards could significantly boost production and trade of electric and hybrid vehicles. Electric vehicles (including hybrid vehicles) drove global trade in environmental goods in 2023, growing by 60% according to the UN.

The strong U.S. dollar and robust American economy are impacting exports by making them more expensive in foreign markets. Although overall exports remain strong, smaller exporters are often the first to feel the effects of these challenges.

So, what does re-globalization mean for the Miami Customs District?  

As trade patterns evolve, we can expect more diversification in imports. Miami serves as a crucial entry point for the U.S., and countries like India and Vietnam illustrate the shift in production away from China. While Miami has strong connections with Latin America and the Caribbean, its ties with India and Vietnam are less established. Developing relationships and forging partnerships will be essential in capitalizing on these shifting trade patterns and expanding trade with these regions.

Geopolitics and the need for supply chain transparency and security will continue to drive additional changes in trade flows. The U.S. is taking firm steps to pivot away from China.  The Biden Administration continued the Trump Administrations China policies and both parties seemed to be aligned on the path to further decouple going into this coming election cycle and beyond. There is no going back now.

The U.S.-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA), has bolstered trade relations between Mexico and Canada. This regional trading alliance is among the world’s most competitive and provides substantial benefits for all three countries by enhancing supply chains, increasing manufacturing, and promoting nearshoring. Mexico recently emerged as the U.S.’s top trading partner. Although trade between the Miami Customs District and Mexico is growing, it lacks a driving force like cross-border industrial production that benefits other customs districts in the U.S. Canada, on the other hand, does not rank in our top 20 for merchandise trade. Our trade with Canada is more pronounced in the services sector, where they are a key market for tourism, finance, and other services. To fully leverage the benefits of the USMCA, Miami will need to connect with the manufacturing sectors in Mexico and Canada.

In the coming weeks and months, preliminary 2023 data will be refined into final figures, providing clearer insights into trade trends. What is already apparent is the unmistakable progress of re-globalization.

Data Sources: U.S. Census Bureau, United Nations Conference on Trade and Development