The inflation rate might be steadying, but the value of Minnesota exports is down

After two years of large gains, Minnesota’s exports declined last year largely because of falling prices and less demand for energy.

State exports dropped 8% in 2023 to $25 billion, according to a report from the Minnesota Department of Employment and Economic Development (DEED). U.S. exports also fell last year by 2%.

The state agency traced most of the downward trajectory to a 65% decrease in exports of mineral oil and fuel, primarily driven by a decline in demand from the state’s largest export market of Canada. If not for that dip, the state’s exports would have been flat last year, according to DEED.

State exports surged — 16% in 2022 and 17% in 2021 — in the two years following the pandemic recession.

“While we always hope to see an overall increase in exports, the growth we saw in certain industries is impressive,” DEED Commissioner Matt Varilek said in a statement.

Vehicle exports jumped 45%, largely fueled by Canada and Mexico. Exports of optical and medical goods rose 7%, led by Ireland, Belgium, Canada, Costa Rica and South Korea. And exports of aircraft and spacecraft grew by 20%, primarily driven by Germany, Japan and Canada.

Meanwhile, exports of cereals declined by 24% and plastics by 11%.

Minnesota doesn’t have one dominant product or category when it comes to exports. Rather, it makes myriad goods that are sold around the world, including snowmobiles, hearing aids, spraying equipment, aircraft, iron ore, soybeans and corn.

The state exported products to about 200 countries last year; Canada was the largest market, followed by Mexico and then China.

Gabrielle Gerbaud, executive director of the Minnesota Trade Office, noted the state made “positive inroads” in some key markets in 2023 such as Mexico, which saw a 19% increase in state exports; Ireland, which grew by 17%, and Australia, which jumped by 33%.

In November, Gov. Tim Walz led the state’s first-ever trade mission to Australia, with representatives from medical technology, clean technology, higher education and agriculture.

Minnesota dropped two spots last year to No. 23 in a ranking of states with the highest exports.

State exports from more than 8,000 companies supported nearly 118,000 jobs in the state, according to DEED.