In 2015, goods valued at more than $250 billion left Texas bound for more than 200 markets around the globe. The economic benefits of this export activity are massive, encompassing production and manufacturing as well as logistics and distribution.
Moreover, the ripples through the economy multiply these effects several times over.
Trade volumes depend on economic conditions and the overall level of global business activity and demand. For specific geographic areas, exports are also often driven by production capacities and natural resource availability and pricing. Market conditions can significantly affect the dollar value of exports; for example, this phenomenon has recently been seen in Texas in dramatic fashion, where falling petroleum prices reduced the value of related exports. Geography is another factor. Goods shipped by water require port facilities, and states proximate to Canada or Mexico have advantages for goods shipped by rail or truck.
Texas export volumes top other states by a substantial (and growing) margin. In 2015, Texas export shipments of merchandise totaled $251.1 billion according to the Office of Trade and Economic Analysis (part of the International Trade Administration of the U.S. Department of Commerce). In comparison, California ranks a distant second with $165.4 billion. (Note that large volumes of services are also exported, but the primary data sources reflect only goods.)
Goods exports from Texas supported more than 1.0 million US jobs (measured as of 2015), which is significantly more than any other state. When multiplier effects are considered, the production of goods for export leads to increases in business activity across a spectrum of support industries. In addition, revenues to consumer-oriented sectors increase as wages are spent.
Exporting is not the exclusive province of big corporations. More than 41,500 companies exported from Texas locations in 2013. Virtually all of them (over 93 percent) were small and medium-sized enterprises with fewer than 500 employees.
Communities across the state are benefiting from trade. In 2014, the Office of Trade and Economic Analysis indicates that merchandise exports from a number of Texas metropolitan areas were substantial including Houston-The Woodlands-Sugar Land (with $119.0 billion), Dallas-Fort Worth-Arlington ($28.7 billion), San Antonio-New Braunfels ($25.8 billion), El Paso ($20.1 billion), Austin-Round Rock ($9.4 billion), Beaumont-Port Arthur ($8.2 billion), Laredo ($6.3 billion), Brownsville-Harlingen ($5.4 billion), McAllen-Edinburg-Mission ($5.3 billion), and Corpus Christi ($5.1 billion).
In terms of industries, Texas’ largest merchandise export category was computer and electronic products, with $45.4 billion of the total merchandise exported last year. Other large merchandise exports were petroleum & coal products ($44.1 billion); chemicals ($39.9 billion); machinery, except electrical ($24.8 billion); and transportation equipment ($23.2 billion).
Looking ahead, crude oil is likely to become a significant component of exports. Earlier this year, Congress and the Administration legalized crude oil exports from the United States for the first time since the “Energy Crisis” of the mid-1970s. While refined products (gasoline and other fuels, for the most part) have long been legal to sell into world markets and a major source of export activity, it had been illegal to export crude except in certain very limited cases (primarily to Canada) and only with a special license (which was almost impossible to get). Industry experts predict that lifting the 40-year export ban will spur billions in investment and production which would otherwise not have taken place. Once global supply and demand shift so that worldwide prices begin to rise in earnest, major US producing regions (particularly Texas) will begin to see real benefits from the change in the law.
As discussed in a prior column, the expansion of the Panama Canal will likely increase the volume of cargoes handled at Texas’ seaports. Both imports and exports (primarily from and to Asian countries) will be affected by the enhanced capacity of the canal. Future trade agreements are also likely to create opportunities in numerous markets, assuming that politics doesn’t get in the way (a subject for another day).
Trade is a substantial source of jobs and economic activity in the United States, supporting millions of jobs on the export side and improving consumer choice and pricing on the import side. Trade is especially beneficial for a state like Texas, with outstanding port facilities and other supporting infrastructure, high production capacity, and abundant natural resources.