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TDM Insight: Top Ten Trade Trends of 2021

Global trade hoisted itself back on track in 2021 after a devastating 2020, and will stabilize itself in 2022, according to the World Trade Organization, and an analysis by Trade Data Monitor, the world’s premier source of trade statistics. Fears about supply chains crumbling and consumers failing to get goods shipped to them were unfounded.

The $8.6 trillion global logistics industry, it turns out, is robust enough to get goods from any producer to almost any buyer or consumer on earth. The WTO now expects global trade to increase by 10.8% in 2021, and by 4.7% in 2022. According to UNCTAD, total imports and exports of goods were $5.6 trillion in the third quarter of 2021, a new quarterly record. Total trade in goods and services is expected to reach $28 trillion for 2021, UNCTAD said.

Here are TDM’s top ten trade trends of 2021, and their likely outcomes in 2022:

1. China Close to Passing U.S. as World’s Top Importer:

In 2001, the year China joined the WTO, it was already the world’s fourth biggest importer, behind the U.S., Japan, and France. Global trade leaders figured it wouldn’t take long for a country of billion-plus consumers to open itself up and become the world’s biggest importer. Instead, the U.S. has continued to be the world’s biggest buyer of goods, the reason Washington maintains leverage in trade negotiations.. However, in the first 10 months of 2021, the U.S. imported $2.3 trillion worth of goods, compared to $2.2 trillion for China. It appears highly likely that in 2022, China will at last pass the U.S. to become the world’s top importer.

2. ASEAN Countries Rival China as Manufacturing Base:

Trade tensions between China and the U.S., and worries about supply chains, have pushed manufacturers to build plants in countries like Vietnam, Thailand and Singapore, all part of the 10-nation ASEAN alliance, that produce many of the same goods as factories in China. For example, Chinese shipments of mobile phones, the ultimate complicated manufactured high-tech consumer good, fell 19.7% in November to $16.5 billion from $20.6 billion. The country still shipped out 88.7 million phones, but that was a 18.8% decline from 109.2 million a year ago. The proliferation of new supply chains across Asia is why Chinese imports from ASEAN countries in November rose 34.9% to $38.5 billion from $28.5 billion, the biggest jump in imports from any major region. By comparison, imports from the U.S. rose 22.1%, to $17.8 billion from $14.6 billion, while shipments from the European Union imports increased only 6.8% to $27.3 billion from $25.6 billion.

3. Commodity Prices Boom Amid Scramble for Resources:

The combination of the work-from-home economy and industrial activity picking up has generated a booming demand for power around the world, despite fears about climate change. And that’s forced up prices. For example, Chinese natural gas imports rose 17.8% to 10.7 million tons from 9.1 million tons a year ago, while, by value, they increased 169.8%. At the same China, cut crude oil imports 8% to 41.8 million tons from 45.4 million tons, although imports by value rose 73.7% to $24.6 billion from $14.2 billion. Prices for everything from soybeans to iron ore rose in 2021, part of a wave of inflation sweeping the globe that is likely continue into 2022.

4. U.S. Hikes Energy Exports:

From gas fields in Texas to coal mines in Appalachia, the U.S. has always been energy rich. Now, it’s becoming a chief supplier of energy to countries around the world, trade statistics show. With new terminals for exporting gas and coal, the U.S. has emerged as the world’s dominant, and most diversified, energy supplier. The U.S. exported $189.4 billion worth of mineral fuels in the first 10 months of 2021, up 53% from $123.4 billion over the same period in 2021. Coal exports increased 49% to $7.3 billion. Energy experts the U.S. to remain dominant in energy production and exports for decades to come.

5. High-Tech Trade Booms:

The prevalence of lockdowns, boosted further by the omicron crisis, has solidified people’s habits around the world. Home workers have been buying computers, routers, and other gear to transform their home spaces into offices. The recent omicron wave of the Covid-19 virus will perpetuate people's habits and buying patterns into 2022. In the first nine months of 2021, Chinese high-tech imports increased 24% to $560.4 billion; U.S. imports went up 16% to $419.2 billion; and European Union imports rose 18% to $332.8 billion.

6. Cars Go Electric:

Global electric car sales are expected to top $800 billion by 2027, more than double the current value of the market. Overall, around five million electric cars are expected to be sold in 2021, driven by evolving technology, and fears about climate change. And it’s showing up in trade statistics. The top market, Germany, increased imports of electric cars 138% to $6.1 billion in the first nine months of 2021. The second biggest market was the UK, which hiked imports 121% to $5.2 billion. The world’s top exporter was Germany, which increased shipments 110% to $10.6 billion.

7. Batteries Needed:

That’s boosted the trade in materials related to making batteries. Chinese exports of lithium batteries increased 78% to $25 billion from $14 billion during the first 11 months of 2021. It’s getting raw materials from Latin America. The world’s top two exporters of the raw material needed to make electric batteries -- lithium carbonate -- are Chile and Argentina, according to an analysis by Trade Data Monitor. But now the Latin American countries have been changing where they ship the material crucial to manufacturing electric vehicles. Increasingly, they’re sending lithium to China, as that country develops its own battery supply chain, instead of other key markets like Japan, South Korea and the U.S., according to TDM.

8. U.S. Consumers Lead Recovery from Covid:

U.S. exports have driven global manufacturing and the recovery of the global economy. In the first ten months of 2021, U.S. exports increased 21.4%, rising to $2.3 trillion from $1.9 trillion. U.S. consumers have been buying a lot of everything. Furniture imports, for example, were up 26% to $60.9 billion, part of the transition to a stay-at-home economy. Vehicle imports increased 16% to $227.7 billion. Even if it’s passed by China in 2022, there’s no sign that the U.S. will crease to be a lucrative consumer markets for the world’s top manufacturing corporations.

9. Fears of Supply Chain Meltdown Overblown:

After a summer of stories about container ships crammed together by ports and in canals, trade rebounded in the fall. For the first 10 months of 2021, the Port of Los Angeles, the top U.S. port, registered imports of $226.9 billion, up 20% from $188.4 billion during the same time period in 2020. Other U.S. ports registered similar increases. It seems unlikely that the container shipping industry will retreat in the forseeable future. It is the anchor of the hyperglobalization that now dominates the economy.

10. Coal is… Back:

Despite the renewed focus on the climate, coal trade boomed in 2021. U.S. coal exports, for example, increased 49% to $7.3 billion over the first ten months. China more than tripled imports of coal by quantity, hiking purchases to 35 million tons in November, up from 11.7 million tons in the same month a year ago. By value, shipments grew a whopping 761.8%, rising to $5.9 billion from $681 million. China’s top sources of coal are Indonesia, Russia, Mongolia and the U.S. Chinese coal imports from the U.S. increased 993.4% in the first ten months of 2021, to 8 million tons, from 733,789 tons over the same time period in 2020, according to TDM data. Imports from Indonesia leapt 60.3% and those from Russia grew 82.2% while shipments from Mongolia fell 43%.

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