By: Alice Ancona
Trade Currents: Headwinds & Tailwinds
- Mexico surpasses China to become the U.S.’s premier trade partner.
- Chinese exports witness their steepest decline since 2020.
- Foreign direct investments in Latin America reach all-time highs.
- Argentina grapples with its highest inflation in 30 years.
Trade statistics weave captivating narratives. Even though they are retrospective in nature, they shed light on pivotal economic trends. The aforementioned currents significantly mold our trade landscape.
Diving into Florida’s trade metrics, an intriguing development materialized by the close of the second quarter (June 2023): Canada nudged Brazil to clinch the top spot as Florida’s leading export destination. This scenario might be temporary; the upcoming third quarter and year-end data will provide more clarity. The increase in U.S. trade with Mexico is reflected in our trade numbers as is decreased trade with China.
Florida’s Export Landscape (Origin Exports)
| Rank | Country | Value | YTD % Change |
| 1 | Canada | 2.77B | -2.77% |
| 2 | Brazil | 2.58B | -5.87% |
| 3 | Mexico | 2.14B | +10.46% |
| 4 | United Kingdom | 1.38B | -31% |
| 5 | Dominican Republic | 1.1B | -8.35% |
*U.S. Census, International Trade Administration
Florida’s Import Scenario
| Rank | Country | Value | YTD % Change |
| 1 | China | 5.9B | -13.39% |
| 2 | Mexico | 5.3B | +9.31% |
| 3 | Germany | 3.4B | +51.64% |
| 4 | Canada | 2.9B | +5.9% |
| 5 | Brazil | 2.6B | +16.25% |
*U.S. Census, International Trade Administration
Amidst its economic challenges, Argentina’s forthcoming elections may further exacerbate concerns. Florida’s imports from Argentina shrank by 28% annually, with exports also waning by 12.6% within the same period.
Meanwhile, Florida’s relationship bond with India is undergoing a notable transformation. Exports from Florida to India have surged by 31% year-on-year, while imports have climbed by 9.7%. Highlighting this shift, by June 2023, Florida’s exports to India exceeded the entire 2018’s annual exports to the country. Similarly, imports up to June 2023 surpassed the annual figure of 2017. Consequently, India now ranks amongst Florida’s top 20 trade partners, surpassing long-standing trade partners such as Spain, Ecuador, and Honduras.
Examining Miami’s Trade Metrics
Metro trade data is not without its challenges and limitations. Notably, it tends to underestimate trade with key partners like Mexico and Canada, as most of our trade with these nations typically enter the U.S. by truck and rail. Furthermore, metro/customs district data captures merchandise trade, including goods produced outside Miami. In contrast, the Florida origin data cited earlier focuses on goods manufactured within Florida. Therefore, it’s essential to realize that the data isn’t directly comparable.
U.S. Customs District 52, representing Miami, encompasses several ports, including Miami International Airport (MIA), Port of Key West, Port Miami, Port Everglades, Ft. Lauderdale International Airport, West Palm Beach International Airport, and the Port of Palm Beach. Among these, MIA, Port Miami, and Port Everglades play the most significant roles in facilitating trade and cargo movement.
In terms of trade partner rankings, their positions remain relatively unchanged. Miami Customs District Trade with China declined by 6.7%, while trade with Mexico rose by 4.24%. These trends align with broader Florida and U.S. patterns. Notably, the growth in trade with Mexico has seen a marked rise in containerized (ocean) trade, showing an overall growth of over 9%. This is accentuated by a 24% surge in containerized imports from Mexico. Such growth underscores the efforts of The Florida-Mexico Work Group on Maritime Commerce. This entity was established jointly by the Florida Ports Council and Mexico’s Coordination of Ports and Merchant Marine (Coordinación General de Puertos y Marina Mercante-DGCPMM) to bolster maritime trade between the two regions. As a founding member of this Work Group, I’m proud to mention that the World Trade Center Miami has been proactive in supporting these efforts, even leading a trade mission to Mexico in 2022 to advance this initiative.
Surge in FDI to Latin America Highlighted
The UN Economic Commission for Latin America & the Caribbean (ECLAC) reports that the region witnessed an influx of about $225 billion in investments in 2022.
Topping the list is Brazil, accounting for 41% of the regional total, positioning it as the fifth leading global destination for FDI. It’s followed by Mexico (17%), Chile (9%), Colombia (8%), Argentina (7%), and Peru (5%).
Brazil experienced an explosive 97% growth in FDI volumes from 2021 to 2022. Mexico, on the other hand, had a more modest rise of 14% year-on-year. FDI in the Caribbean region went up by 27%, touching $5.9 billion, with the Dominican Republic registering an impressive 25% hike, aggregating to $4 billion.
Contrastingly, as Latin America and the Caribbean enjoyed an uptrend in FDI, there was a downturn in the United States and certain European Union nations. Globally, FDI flows dipped by 12% year-on-year, settling at US$1.29 trillion.
While this influx is substantial for the region, Latin America and the Caribbean are punching under their weight, drawing in just 8% of the worldwide FDI flow.
This scenario prompts critical inquiries. Chiefly, is the region redirecting/nearshoring manufacturing from China? It’s a mixed response. Over half of the investment was channeled into the services sector, predominantly encompassing financial services, energy, gas, water, communication, and transportation. In terms of manufacturing, the investments were concentrated in the automotive and fossil fuel sectors.
FDI generally results in economic growth and job creation. Both have positive implications for Miami and Florida’s trade relationship with the region.
Argentina’s Inflation Crisis Intensifies
Argentina, Latin America’s third-largest economy, is teetering on the edge of its sixth recession within a ten-year span. The nation has long been ensnared in economic turmoil and financial predicaments, with its foreign reserves dwindling rapidly.
Now, Argentina grapples with surging inflation, the most severe it’s seen in over 30 years. By year’s end, this rate might approach a staggering 200%. In a significant move, the country’s central bank recently depreciated the peso by nearly 18%. As reported by Reuters, this has propelled an alarming four out of every ten Argentinians into poverty, with prices skyrocketing.
To aid Argentina’s struggling economy, the IMF’s executive board sanctioned a disbursement of US$7.5 billion. In tandem, supplementary loan packages were unveiled by the World Bank and the Inter-American Development Bank.
This financial intervention comes crucially ahead of the general elections slated for October 22nd, where Argentinians will cast their votes for presidential, vice-presidential, congressional, and gubernatorial positions.
The year’s initial half has undeniably been intriguing. Pinpointing the start line of the “new normal” in global trade remains elusive. Recovery has been disparate across international markets, and we’ve yet to see what the remaining months bring. Stay tuned.
Alice Ancona is Senior Vice President and Chief Operating Officer of the World Trade Center Miami. She formerly led the international endeavors of the Florida Chamber of Commerce, serving as a prominent advocate for policies that enhance international trade, logistics, and investments. Her efforts centered on removing trade barriers, expanding market access, facilitating exports, and strengthening Florida’s trade infrastructure.
