Import Share of Book Market on the Rise

The usual U.S. trade surplus in books turned into a 4.1% trade deficit in the last five months, with this trend expected to persist for several years.

Book exports are up 1.5% through October 2003 compared to the same period a year earlier, after having declined at the same pace for five years. Imports, on the other hand, have risen 7.7%. Both imports and exports are expected to expand during the economic recovery, with imports growing more quickly and the trade deficit widening at the expense of U.S. printers.

But most of the worsening in trade results was due to the deterioration in the price competitiveness of U.S. book printers. The 34% appreciation of the dollar from the mid-1990s through 2001 prompted publishers to shift print contracts to other countries. It also prompted large U.S. printers to buy or build foreign print shops. About half of the dollar appreciation was reversed in 2003, making U.S. printers more price competitive with Canadian, Japanese, and European competitors. There has been very little impact on print sourcing thus far from the recent dollar depreciation. Some small gains for U.S. printers are expected in 2004 and 2005.

However, the largest share of the lost book printing business went to China, which got the business on the basis of real cost differences as it keeps its currency constantly stable with the U.S. dollar. That business is not returning in 2004. Beyond that, however, the Chinese cost advantage will be eroded gradually either by rising domestic inflation (already begun) from the prolonged economic boom, or by an upward revaluation of the currency to trim exports to fight inflation.