Author: Brian Daigle
International Trade Analyst
Change in 2015 from 2014:
- U.S. total exports: Decreased by $10.8 billion (25 percent) to $31.7 billion
- U.S. general imports: Decreased by $3.1 billion (10 percent) to $27.4 billion
- U.S. trade surplus: Decreased by $7.7 billion (64 percent) to $4.3 billion
U.S. Total Exports
U.S. total exports to Brazil decreased by $10.8 billion (25 percent) to $31.7 billion in 2015. U.S. exports for all major industry sectors declined, with three major factors contributing to the downturn: (1) the value of U.S. petroleum exports to Brazil fell because of declines in both global crude petroleum prices and Brazilian demand; (2) Brazil's worsening macroeconomic position reduced demand for U.S. manufactured goods;1 and (3) lower commodity prices depressed Brazilian investment in U.S. machinery and equipment.
The largest U.S. export decline occurred in petroleum products, which fell by 50 percent to $2.9 billion in 2015 (table BR.1). Within this sector, the value of U.S. exports of light fuel petroleum oils fell by 63 percent from the 2014 export peak of $3.1 billion to $1.1 billion by 2015, resulting in part from lower world petroleum product prices.2 By volume, U.S. exports of light fuel petroleum oils decreased 37 percent, from 25.8 million barrels in 2014 to 16.3 million barrels in 2015.3
Table BR.1: Brazil: U.S. total exports, general imports, and merchandise trade balance, by major industry/commodity sectors, 2011–15
|U.S. total exports:|
|Chemicals and related products||9,449||9,541||10,332||10,338||8,559||-1,779||-17.2|
|Textiles and apparel||290||304||274||302||247||-55||-18.1|
|Minerals and metals||1,355||1,429||1,470||1,250||875||-374||-30.0|
|U.S. general imports:|
|Chemicals and related products||2,651||2,624||2,274||2,339||2,043||-296||-12.7|
|Textiles and apparel||120||112||117||131||142||10||8.0|
|Minerals and metals||5,570||5,651||5,232||6,235||5,273||-962||-15.4|
|U.S. merchandise trade balance:|
|Chemicals and related products||6,799||6,917||8,058||7,999||6,516||-1,483||-18.5|
|Textiles and apparel||170||192||156||171||106||-65||-38.2|
|Minerals and metals||-4,215||-4,222||-3,762||-4,985||-4,398||588||11.8|
Source: Compiled from official statistics of the U.S. Department of Commerce for the 2011–15 period. These reflect all official revisions of previously published data up to June 2015 (accessed February 19, 2016). Note: Import values are based on Customs value; export values are based on free along ship value, U.S. port of export. Calculations based on unrounded data. Sectors are ordered by the level of processing of the products classified within each sector.
a Not meaningful for purposes of comparison.
Due to a loss of profitability in the Brazilian mining sector, U.S. construction and mining machinery exports fell 36 percent, from $967 million to $619 million (table BR.2). Brazilian imports of mining machinery and equipment from other major machinery exporting nations, including China, Italy, Germany, and South Korea also fell in 2015.4 Prices of iron ore and copper fell by 67 percent and 37 percent, respectively, during 2014–15, reducing investment in mining activity in Brazilian iron and copper mines and making purchases of new mining equipment and subsidiary products from the United States less feasible.
Table BR.2: Brazil: Leading changes in U.S. exports and imports, 2011–15
|U.S. total exports:|
|Petroleum products (EP005)||4,337||5,798||5,053||5,689||2,855||-2,834||-49.8|
|Computers, peripherals, and parts (EL017)||1,794||1,812||1,446||1,289||847||-442||-34.3|
|Semiconductors and integrated circuits (EL015)||1,447||1,483||1,562||1,086||779||-307||-28.3|
|Medical goods (EL022)||995||1,089||1,137||1,183||1,060||-123||-10.4|
|Construction and mining equipment (TE004)||1,606||1,319||1,112||967||619||-348||-35.9|
|U.S. general imports:|
|Aircraft, spacecraft, and related equipment (TE013)||895||985||1,742||2,322||3,037||716||30.8|
|Minerals and metals:|
|Steel mill products (MM025)||2,119||2,417||2,075||2,650||2,347||-303||-11.4|
|Primary iron products (MM021)||1,130||897||724||694||454||-240||-34.6|
Source: Compiled from official statistics of the U.S. Department of Commerce for the 2011–15 period. These reflect all official revisions of previously published data up to June 2015 (accessed February 19, 2016).
Note: Import values are based on Customs value; export values are based on free along ship value, U.S. port of export. Calculations based on unrounded data.
aLess than $500,000.
Similarly, Brazil's worsening economic conditions during 2015 contributed to the fall in demand for U.S. exports of advanced technology products. U.S. exports of many advanced technology goods declined, such as semiconductors (down 28 percent), computer parts and accessories (down 34 percent), and medical goods (down 10 percent). These declines were likely spurred by reduced consumer demand as well as a weakened manufacturing environment.5
Finally, plummeting U.S. cereals exports to Brazil (an 84 percent decline, or $627 million reduction) contributed to the overall drop in U.S. exports. From 2014 to 2015, wheat and meslin exports from the United States fell in value terms from $678 million to $118 million (an 82 percent decline), and in quantity from 2.5 million metric tons to 426 thousand metric tons (81 percent). Both the United States and Brazil are major wheat producers, and the shift was likely due to a short-term change in Brazilian demand, rather than a significant long-term development in trade flows between the two countries. 6
U.S. General Imports
U.S. general imports from Brazil fell by $3.1 billion to $27.4 billion in 2015, a 10 percent decline. As with U.S. exports to Brazil, the majority of the reduction in U.S. general imports consisted of energy-related products. Other declines occurred in steel and iron primary products (such as ingots), as well as in oilseeds. Notable rises in U.S. imports of Brazilian products occurred in smaller aircraft and steel products such as plates, sheets and strips.
The value of U.S. imports of energy-related products from Brazil dropped by 29 percent to $4.5 billion in 2015, reflecting in large part the decline in global energy prices. Despite a 30 percent increase in the quantity of U.S. imports of crude petroleum from Brazil, which rose to 69 million barrels,7 the fall in crude prices reduced the value of U.S. imports of Brazilian crude by 28 percent, from $5.2 billion to $3.7 billion.8 In other energy industries, the value of imports also fell: fuel ethanol from sugarcane (a 28 percent drop), residual fuel oils (22 percent), and conventional gasoline and motor fuel blending stocks (each about 20 percent). The United States is the largest market for Brazil’s exports of refined petroleum products.
U.S. imports of ingots and slabs of carbon and alloy steels declined in value terms from $2 billion to $1.5 billion (28 percent), and imports of steel mill and primary iron products also fell. Similar to petroleum prices, a contraction in the prices of steel and iron commodities reduced the overall value of U.S. imports of Brazilian steel and iron products.9
U.S. imports of oilseeds, specifically soybeans, plunged $554 million to less than $1 million in 2015. Similar to the previously mentioned fall in U.S. exports of wheat, the increase in U.S. imports of soybeans from Brazil in the previous year was likely an anomaly; the United States imported less than $500,000 worth of soybeans in both 2011 and 2012. As the United States and Brazil are respectively the first and second largest global producers of soybeans, the decrease in imports was likely a return to market norms following a two-year uncharacteristic spike.10
Two areas that experienced a significant rise among U.S. imports from Brazil were aircraft and certain carbon and alloy products. U.S. imports of aircraft, spacecraft, and related equipment from Brazil rose 31 percent ($2.3 billion to $3 billion). Specifically, new passenger transport aircraft imports from Brazil rose 32 percent to $2.2 billion, and new turbofan-powered aircraft imports rose 50 percent from $257 million to $387 million. From 2014 to 2015, U.S. imports of small commercial aircraft from Brazil, mostly concentrated in the aircraft firm Embraer, rose from 67 to 93 aircraft.11 This growth is due in part to the rise in demand from major U.S. network carriers for smaller commercial aircraft of 76 seats or less, an area in which Embraer has traditionally done well, rather than larger 120- to130-seat aircraft.12 Embraer has also performed well in sales of business aircraft to U.S. customers in recent years.13
U.S. Trade Balance
The U.S. trade surplus with Brazil shrank by $7.6 billion to $4.3 billion (64 percent) in 2015. The most significant trade balance shifts occurred in chemical and related products (down 18 percent from 2014), electronic products (down 25 percent), transportation equipment (down 37 percent), energy products (switched from surplus to deficit), and minerals and metals (up 12 percent). The overall fall in the trade surplus was largely due to a decline in the value of U.S. exports to Brazil rather than an increase in U.S. imports from Brazil. Brazil and the United States have frequently switched between trade surpluses and deficits, though the trend over the past 10 years has been a relatively small U.S. trade surplus.14 Additionally, the decline in global prices for petroleum products contributed significantly to the reduction in value of U.S. exports. The reduction in Brazilian imports of U.S. products appears to reflect a combination of global economic trends that affected the Brazilian economy in particular (including the fall of commodity prices, particularly crude petroleum) and Brazilian macroeconomic developments that lowered Brazilian domestic demand.
1 Brazil's economy contracted 3.8 percent last year, its unemployment rate rose to nearly 10 percent, and Brazilian wages fell by 2.4 percent, placing pressure on the Brazilian manufacturing sector. Lyons, “Brazil Economic Woes Deepen amid Political Crisis,” March 25, 2016.
2 The fall in global crude petroleum prices is explored in greater detail in the special topic chapter.
3 EIA, “Petroleum and Other Liquids: U.S Exports by Destination,” June 30, 2016.
4 GTIS, World Trade Atlas database (accessed March 28, 2016).
5 Sheldon, “Brazilian Manufacturing Remained in Contraction,” January 5, 2016.
6 Bunge and Newman, “Corn Imports Surge in U.S.,” April 13, 2016.
7 This amount still accounted for less than 3 percent of total U.S. refined petroleum products imports.
8 EIA, “Petroleum and Other Liquids: U.S. Imports by Country of Origin,” June 30, 2016.
9 Iron ore prices declined from $68 per dry metric ton to $41 in 2015. Steel prices also declined, from $490 to $210 per metric ton. World Bank Commodity Price database (accessed June 23, 2016); InfoMine database, March 28, 2016.
10 Reap, “U.S. Soybean, Corn Prices Seen Dropping,” August 27, 2015.
11 GTIS, World Trade Atlas database (HTS subheading 8802.40; accessed July 5, 2016).
12 Levine-Weinberg, “Embraer Could Be on the Verge,” November 13, 2015.
13 Zachs Equity Research, “Embraer Posts Strong 2015 Jet Deliveries,” January 15, 2016.
14 Trading Economics, “Brazil Balance of Trade,” April 10, 2016.