3-D printing is often viewed as an opportunity for companies to advance in manufacturing, but the emergence of this technology could be curtains for cross-border trade.
According to a recent ING report, “3-D Printing: A Threat to Global Trade,” re-bundling production phases closer to the consumer could significantly minimize cross-border trade in intermediates and final goods. The expansion of 3-D printing may lead to more reshoring to developed countries and could curb outsourcing to emerging countries. What’s more, 3-D printing will also reduce labor input, prompting labor costs to become less of a driving factor when deciding on global sourcing locations.
What 3-D printing could mean for trade
If 3-D printing continues to grow at its current pace, ING said world trade in goods and services could be 22 percent lower in 2060—or by 2040 if growth accelerates.
In the next two decades, according to the report, a 50 percent share of manufacturing could be done using 3-D printing. If we consider that world trade consists of commodities and services and manufacturing’s share in the world economy continues to decline, it is possible that manufactured goods could make up less than half of world trade by 2060.With 3-D printing, half of the goods that are currently imported could end up being made locally, meaning world trade in goods would be almost one fifth less than it is now.
What’s more, if 3-D printing experiences major growth in the next few years, the technology could cause a 38 percent decline in world trade by 2040.
If local mass production uses 3-D printers, the growth of world trade will not be able to outpace world GDP growth in the next few decades. As ING noted, if 3-D printing grows at its current pace, world trade growth would fall back 1.2 times the growth rate of world GDP.
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How bilateral trade flows could be impacted
Even though automotive bilateral trade flows, including exports to the U.S. from Mexico, are projected to be impacted by 3-D printing the most, labor intensive trade flows could also change in coming years.
For labor intensive goods, including apparel and footwear, flows from Asian nations to the U.S. could be affected the most. The U.S. remains one of the top export destinations for consumer products. The U.S. may benefit disproportionately from reduced cross-border trade in consumer products, since the share of imported consumer products in total American imports is fives times as large as the share of consumer products in American exports. American manufacturers subject to competition from imports stand to have the most to gain.
Consequences for U.S. trade balances
The U.S. trade balance—which is of particular concern for the current administration—will benefit more than other nations from 3-D printing, since the front running industries in 3-D printing make up 58 percent of U.S. imports, compared to just 43 percent of worldwide imports.
In the future, the U.S. will likely be substituting imports with domestically 3-D printed goods, which could mean the bilateral trade deficits of the U.S. with China, Germany and Mexico may shrink. China is currently accountable for 40 percent of the overall U.S. trade deficit, according to ING, and Mexico and Germany are each responsible for 8 percent. And 3-D printing could have a significant downward influence on the overall U.S. trade deficit.
The report also noted, however, that trading with other nations has to be accounted for, since the U.S. runs a large trade surplus with the world (when it comes to industrial machines and aerospace in particular). For those industries, the U.S. has much more export to lose, causing the positive effect of 3-D printing on the U.S. trade deficit to minimize as we get closer to 2040 and 2060.
Though ING noted it isn’t possible to calculate exactly how 3-D printing will impact the trade balances of the U.S., the report said it could very likely cut the overall U.S. trade deficit permanently.