Trade Deficits

U.S. Trade Deficit by Country: Current Statistics and Issues, by Kimberly Amadeo, 1/9/17

The United States has the world's largest trade deficit and has run one since 1975. In 2015, the deficit on goods and services was $500.4 billion, higher than the $490.2 billion deficit in 2014.

The deficit occurred because exports, at $2.3 trillion, were lower than imports, at $2.761 trillion. (Source: "U.S. International Trade in Goods and Services," U.S. Census Bureau.)

The U.S. trade deficit in goods alone was $762.5 billion, 2.4 percent higher than last year.

The United States exported $1.5 trillion in goods. The biggest categories are commercial aircraft, automobiles and food. It imported $2.3 trillion. The largest categories are automobiles, petroleum, and cell phones. (Source: "Foreign Trade Balance," U.S. Census Bureau.)

Why Can't America Just Make Everything It Needs?

The United States generally runs a deficit with countries who fit at least one of the following three criteria:

1.    They can produce things more cheaply than we can, such as consumer products or oil. (Here's why this is changing with U.S. production of shale oil).

2.    They don't need what we are good at making, such as agricultural products, industrial supplies (like organic chemicals), capital goods (like transistors, aircraft, motor vehicle parts, computers, and telecommunications equipment), or high-end consumer goods (like automobiles and medicines).

3.    We trade a lot of everything with them, but we happen to import more than we export.

Most of the trading partners that the United States runs deficits with fall into the first two categories, but a few (Canada, Mexico, Germany) fall into the last.

That's why the countries with which the U.S. runs the largest trade deficits in goods are not always its most important trading partners. Some nations export a lot without importing much.

However, the top five trading partners also have the largest deficits. (Please note that the Census provides trade data by country for goods only, not services.)

1.    Canada - $576.7 billion traded with a $15.5 billion deficit.

2.    China - $599.4 billion traded with a $367 billion deficit.

3.    Mexico - $532.1 billion with a $60.6 billion deficit.

4.    Japan - $193.6 billion traded with a $68.6 billion deficit.

5.    Germany - $174.8 billion traded with a $74.9 billion deficit.

The Largest Deficit Is With China

More than 40 percent of the U.S. trade deficit in goods was with China. America's $367 billion deficit was created by $483,2 billion in imports, primarily consumer electronics, clothing, and machinery.  It outweighed the $116.2 billion in U.S. exports to China. (Source: "U.S. Trade in Goods With China," U.S. Census.)

Note that many of the imports are U.S.-based companies that ship raw materials to be assembled cheaply in China. They are counted as imports even though they create income and profit for these U.S. companies. Nevertheless, this practice does outsource jobs. For more, see U.S. Trade Deficit With China.

Germany Is Next

The U.S. trade deficit with Germany is $74.9 billion and growing. The U.S. exports $49.9 billion, a large portion of which is automobiles, aircraft and pharmaceuticals. The U.S. imports $124.9 billion in similar goods: automotive vehicles and parts, industrial machinery and medicine. (Source: "U.S. Trade Deficit With Germany," "U.S. Exports to Germany," "U.S. Imports from Germany," U.S. Census.)

Japan Is the Third 

The third largest trade deficit is $68.6 billion with Japan.The world's fifth largest economy needs the agricultural products, industrial supplies, aircraft and pharmaceutical products that the U.S. makes. Exports totaled $62.5 billion in 2015.

Imports were higher, at $131.1 billion. Much of this was automobiles, with industrial supplies and equipment making up another large portion. Trade has improved since the 2011 earthquake, which slowed trade and made auto parts difficult to manufacture for several months. (Source: "Trade Balance with Mexico," U.S. Exports to Mexico," U.S. Census.)

The U.S. Has a Deficit With Its NAFTA Partners

Canada, the United States, and Mexico are partners in the world's largest trade agreement, NAFTA. The U.S. trade deficit with Canada is $15.5 billion. That's only 2.6 percent of the total trade of $575.7 billion.

The United States exports $280.6 billion, more than to any other country. It imports $296.1 billion. By far, the largest export is automobiles -- both the finished product and parts.

Other large categories include petroleum products, and industrial machinery and equipment. The largest import is crude oil and gas from Canada's abundant shale oil fields. (Source: "Trade With Canada,"  "U.S. Exports to Canada," "U.S. Imports from Canada," U.S. Census.)

The trade deficit with Mexico was $60.7 billion. Exports were $235.7 billion, made up primarily of auto parts, and petroleum products. Imports were $296.4 billion, with crude oil being the largest component. (Source: "U.S. Trade With Mexico," "U.S. Exports to Mexico," "U.S. Imports from Mexico," U.S. Census.) 

https://www.thebalance.com/trade-deficit-by-county-3306264