COVID-19’s Impact on the Global Economy

The COVID-19 pandemic has had systemic implications for nearly every facet of our lives and society. The world of international trade is certainly no exception. Businesses and governments alike have had to figure out how to continue import and export operations while accounting for the risks present in the current trading climate. Challenges that importers and exporters have faced include: 1) dramatic demand spikes for certain goods, 2) equally dramatic crashes in demand for other goods, 3) significant back-ups of inflowing shipments at key ports, 4) an increase in trade restrictions and other barriers to trade, and 5) contractions in trade volumes, just to name a few.

Trade Challenges in Florida

Florida has not been immune to these trade disruptions. The U.S. Census Bureau released 2020 annual trade data on February 5, 2021, which included interesting trends about Florida’s trade flows. International trade is big business in the Sunshine State In fact, in 2019, Florida exported $57.3 billion in goods, and ranked as the seventh largest exporting state according to the U.S. Census Bureau. Similarly, Florida imported $83.7 billion in goods in 2019, and ranked the tenth largest importing state. In recent years, Florida’s top three export destinations have been Brazil, Canada, and Mexico, respectively while its top import sources have been China, Mexico, and Canada, respectively. In 2020, these import trade relationships took a hit. Fortunately, however, the state is quickly rebounding.

EXPORTS

In 2020, total Florida export values have crashed relative to recent years. The 2020 annual data, which was released on February 5, 2021, indicates that Florida exports of goods crashed 19.2% ($11.0 billion) in 2020 compared to 2019, and 22.4% ($13.4 billion) in 2020 compared to 2018. In 2019, Florida’s top three export categories were electronics and electric machinery (HS code 85), heavy machinery (HS code 84), and aircraft/spacecraft and parts (HS code 88). These export categories all crashed in 2020 compared to 2019 at a rate of 14.84% ($1.49 billion), 16.5% ($1.52 billion), and 29% ($2.4 billion), respectively. Florida’s exports to its most significant export partner, Brazil, were impacted 22.4% ($1.0 billion) compared to 2019. Interestingly, the majority of Florida’s export crash occurred in the April to September of 2020. Exports are steadily rebounding and total Florida export values in October to December 2020 are more similar to the same months in 2019 or 2018.

Source: U.S. Census Bureau

Source: U.S. Census Bureau

IMPORTS

In 2020, total Florida import values also crashed relative to recent years. The 2020 annual data indicates that Florida imports of goods crashed 7.6% ($6.4 billion) in 2020 compared to 2019, and 7.9% ($6.7 billion) in 2020 compared to 2018. Florida’s top three import categories are electronics and electrical machinery (HS code 85), heavy machinery (HS code 84), and automobiles / automobile parts (HS 87). These export categories all crashed in 2020 compared to 2019 at a rate of 4.6% ($493 million), 12.1% (1.0 billion), and 20.0% ($1.5 billion), respectively. Florida’s imports from its most significant import source, China, decreased 9.2% ($1.2 billion) compared to 2020. The majority of the crash in imports occurred in April to June of 2020. Imports have quickly rebounded and total imports in September to December 2020 are similar to the same period in 2019 or 2018. In fact, Florida imports in December 2020 were 2.3% higher than Florida imports in December 2019.

Source: U.S. Census Bureau

Source: U.S. Census Bureau

Promising Months Ahead

Although the State of Florida continues to deal with sky-high COVID-19 figures and there is still much to be done to combat the virus, Florida’s trade outlook appears promising and a return to normal is on the horizon. Florida Secretary of Commerce Jamal Sowell and president & CEO of Enterprise Florida, Inc. stated in a December 2020 press release:

Florida’s economy was blindsided by a sudden recession and prolonged disruptions to supply chains because of COVID-19. But jobs are coming back, commerce is on the uptick and Enterprise Florida is in lockstep with Governor DeSantis’s bold mission to retake the high ground of prosperity for all corners of Florida.

The outlook for Florida’s many seaports is also positive. For example, Moody’s Investors Service forecasted a stable outlook for the Port of Palm Beach. Moody’s Chief Financial Officer and Deputy Director Paul Zielinski stated:

The Port of Palm Beach, like most businesses, was significantly impacted in 2020 by the COVID-19 pandemic. While we saw a slight declines in cargo shipments, the no-sail order on our cruise business was and continues to be our greatest challenge. However, we have the financial depth to meet these challenges with a liquidity position exceeding 24 months. We also have the ability to maintain a favorable liquidity position as a result, of both the solid profit margins inherent in our long-term agreements and our continued commitment during this time to control expenses.

Finally, Doug Wheeler, the president and CEO of the Florida Ports Council remarked on the challenges and opportunities ahead:

Recent studies have shown Florida’s ports remain resilient to disasters, from recurring hurricanes to disruptions to the global supply chain. We continue to grow and diversify — in goods and services, trade partners, and innovative technologies — to help us withstand and endure the myriad challenges we face. Although we know the COVID‑19 pandemic will continue to impact our port economies into the unforeseeable future, every single day, Florida’s ports continue to deliver critical goods to individuals, families, and businesses. Our ports are economic engines of our communities, and they will be instrumental in getting the state’s, and the nation’s, economy back on track.

Overall, Florida importers and exporters continue to deal with many challenges including contractions in trade volumes, disruptions in supply chains, and quickly changing federal trade policies. Nevertheless, Florida’s remarkable path to recovery is promising. The Florida’s trade community hopes for the trajectory of the last four months to continue through 2021.

DATA NOTES

All data sourced from the U.S. Census Bureau and adjusted for inflation to base month December 2020. 2020 annual data was released by the U.S. Census Bureau on February 5, 2021. Although U.S. Census Bureau trade data can be helpful, the data has many limitations. For further questions on how COVID-19 may have impacted your particular industry’s trade flows and for assistance on any trade or customs matters, contact us at info@diaztradelaw.com.