These are uncertain times for U.S. companies trading globally. While e-commerce and advances in logistics have been able to connect U.S. companies with global markets and millions of new potential customers more than ever–there have also been significant policy changes. Over the past few years, renegotiated trade deals have created a certain degree of unpredictability in the global trade equation.
For instance, the ongoing trade dispute with China has created challenges for many U.S. businesses. The impact is clear when we look at the stats. In 2018. China was the #1 trading partner for the U.S., but in 2019 it fell to #3. American businesses that regularly traded with China have had to seek alternative trading partners, which has opened the door for several growing and emerging markets.
Which markets are expected to thrive in 2020? We’ve compiled a list of the top 3 international markets for your business to consider
As a result of the U.S.-China trade war, Vietnam is quickly becoming a top manufacturing supplier, thereby boosting its economy and increasing its attractiveness for U.S. exporters. In addition, many Chinese firms are also using their resources and knowledge to expand in Vietnam by building factories.
Additionally, Vietnam recently signed a new trade deal with the EU, further aiding Vietnam’s flourishing global trade profile. With $25 billion in shipped goods during the first half of 2019, Vietnam has become the eighth largest source of American imports, up from 12th place a year ago. Its top imports are: integrated circuits ($15.6B), telephones ($10.2B), refined petroleum($7.23B), electrical parts ($4.69B) and light rubberized knitted fabric ($4.51B).
Mexico has also benefitted from the recent U.S.-China trade tensions. For years, the U.S.-Mexico Chamber of Commerce has focused on nearshoring. This practice, the U.S. tariffs and rising wages in China, and a renegotiated USMCA deal have all aligned to have U.S. businesses rethinking China and considering Mexico.
As we’ve also previously stated, the USMCA (which has been ratified by both Mexico and the U.S and is expected to be ratified by Canada’s parliament within weeks) will offer significant benefits for U.S. businesses that trade with Mexico (and Canada). The agreement will streamline trade between the three countries by adopting new customs procedures such as: a universal border clearance platform, e-signatures, self-certification of origin, and other measures. It will boost e-commerce and the digital economy by ensuring that data moves freely across borders and that the localization of data is prohibited. The USMCA also contains strong protections for intellectual property rights, including enforcement tools to guard against counterfeiting and piracy.
Japan has long been one of the most important trading and investment partners for the U.S. In 2018, as both exports and imports increased versus 2017, bilateral U.S.-Japan trade in goods and services surpassed $300 billion.
In 2020, we anticipate that growth to continue. Trade deals like the EU-Japan Economic Partnership Agreement and the Regional Comprehensive Economic Partnership (RCEP)–which would link the 10 member countries of the Association of Southeast Asian Nations (ASEAN) with China, Japan, South Korea, Australia, and New Zealand–will further secure Japan’s spot as a key member in the international trade system.
Japan continues to be a leading importer of U.S. aerospace and defense equipment and, increasingly, an integrated co-developer. Related growth sectors include defense procurement, advanced manufacturing, and cyber security solutions.