The United States is a major trading nation. Figure 4.50 represents total U.S. imports and exports, including foreign investments and earnings (e.g., earnings from U.S.-owned foreign assets). As is clear from this figure, the net trade surplus ended in the 1970s, and the United States now runs substantial trade deficits, around 4% of the GDP. In addition, trade is increasingly important in the economy.
Figure 4.50 Total imports and exports as a proportion of GDP
Figure 4.51 shows the total trade in goods and services, as a percentage of U.S. GDP. These figures are surprisingly similar, which show that investments and earnings from investment are roughly balanced—the United States invests abroad to a similar extent as foreigners invest in the United States.
Figure 4.51 U.S. trade in goods and services
Figure 4.52 shows the earnings on U.S. assets abroad and the payments from U.S.-based assets owned by foreigners. These forms of exchange are known as capital accounts. These accounts are roughly in balance, while the United States used to earn about 1% of GDP from its ownership of foreign assets.Figure 4.52 Income and payments (% GDP)
Table 4.2 Top U.S. trading partners and trade volumes ($ billions)
Rank
Country
Exports Year-to-Date
Imports Year-to-Date
Total
Percent
All Countries
533.6
946.6
1,480.2
100.0%
Top 15 Countries
400.7
715.4
1,116.2
75.4%
1
Canada
123.1
167.8
290.9
19.7%
2
Mexico
71.8
101.3
173.1
11.7%
3
China
22.7
121.5
144.2
9.7%
4
Japan
36.0
85.1
121.0
8.2%
5
Germany
20.4
50.3
70.8
4.8%
6
United Kingdom
23.9
30.3
54.2
3.7%
7
Korea, South
17.5
29.6
47.1
3.2%
8
Taiwan
14.0
22.6
36.5
2.5%
9
France
13.4
20.0
33.4
2.3%
10
Italy
6.9
18.6
25.5
1.7%
11
Malaysia
7.2
18.0
25.2
1.7%
12
Ireland
5.2
19.3
24.5
1.7%
13
Singapore
13.6
10.1
23.7
1.6%
14
Netherlands
15.7
7.9
23.6
1.6%
15
Brazil
9.3
13.2
22.5
1.5%
Who does the United States trade with? Table 4.2 details the top 15 trading partners and the share of trade. The United States and Canada remain the top trading countries of all pairs of countries. Trade with Mexico has grown substantially since the enactment of the 1994 North American Free Trade Act (NAFTA), which extended the earlier U.S.–Canada agreement to include Mexico, and Mexico is the second largest trading partner of the United States. Together, the top 15 account for three quarters of U.S. foreign trade.
Key Takeaways
The United States is a major trading nation, buying about 16% of GDP and selling about 12%, with a 4% trade deficit. Income from investments abroad is roughly balanced with foreign earnings from U.S. investments; these are known as the capital accounts.
The United States and Canada remain the top trading countries of all pairs of countries. Mexico is the second largest trading partner of the United States. China and Japan are third and fourth. Together, the top 15 account for three quarters of U.S. international trade.
