Decomposing Movements in U.S. Non-Energy Import Market Shares
Country market shares of U.S. non-energy imports have changed considerably since 2002, with varying volatility across three subperiods: pre-crisis (2002–07), crisis (2007–09) and post-crisis (2009–14). In this paper, we analyze market shares for four main trading partners of the United States (Canada, Mexico, China and Japan). We use shift-share analysis to decompose movements in the aggregate market shares into those related to actual shifts in product-specific market shares, versus shifts in the composition of U.S. import demand and the interaction between these two effects. Our analysis shows that separating these effects is important, since shifts in product-specific market shares explain varying amounts of movements in the overall market shares across countries and between time periods. Specifically, we find that two-thirds of Canada’s decline in U.S. market share is due to shifts in product-specific market shares and that these losses were relatively stable across subperiods. In contrast, losses associated with a shift in the composition of U.S. import demand were most important during the crisis and have in fact supported Canada’s market share since 2009. We also find that almost three-quarters of Canada’s total loss in market share was concentrated in two sectors: (i) motor vehicles and parts, and (ii) forestry products and building and packaging materials. Japan’s loss in U.S. market share was very similar to Canada’s over this period. In contrast, China and Mexico both gained market share between 2002 and 2014. China gained mostly in product-specific market share, while Mexico benefited from favourable shifts in U.S. import demand.