The U.S. has run a trade deficit
since 1975. In 2012, the deficit in goods and services was nearly $540 billion. This means that U.S. exports of $2.194 trillion were less than its imports of $2.73 trillion in goods and services. (Source: U.S. Census Bureau, U.S. International Trade in Goods and Services
International trade is measured by the Bureau of Economic Statistics within the U.S. Census Bureau. However, the Bureau only counts trade in goods, not services, when it breaks it out by country. The U.S. trade deficit in goods alone was $726.7 billion. That's because the U.S. exported $1.547 trillion in goods, while importing $2.275 trillion. However, U.S. exports have been strengthening compared to imports, because the goods deficit was nowhere near the record deficit of $828 billion set in 2006. (Source: U.S. Census, Foreign Trade Balance)
In fact, the U.S. is the world's third largest exporter, after the European Union ($2.17 trillion) and China ($2.05 trillion). U.S. exports in goods barely surpassed Germany ($1.4 trillion). (Source: CIA World Factbook, Exports Rank Order
The U.S. generally runs a deficit with countries who fit at least one of the following three criteria:
- They are great at exporting things we don't have enough of, like cheap consumer products or oil.
- They don't need what we are great at exporting, 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).
- We trade a lot of everything with them, but we happen to import more than we export.
Most of the trading partners that the U.S. runs deficits with fall into the first two categories, but a few (Canada, Mexico, Germany) fall into the last.
Countries With the Largest Deficits Aren't Necessarily the Largest Partners:
That's why the countries with which the U.S. runs the largest trade deficits are not always its largest trading partners. Some countries just export a lot, without importing much. However, the five largest trading partners also run the largest deficits. They are
- Canada - $616.6 billion traded with a $31.8 billion deficit.
- China - $536.2 billion traded with a $315 billion deficit.
- Mexico - $494 billion with a $61.3 billion deficit.
- Japan - $216.4 billion traded with a $76.3 billion deficit.
- Germany - $157.3 billion traded with a $59.7 billion deficit.
Trade Deficit With China:
More than 40% of the U.S. trade deficit in goods was with China. America's $315 billion deficit was created by $425.6 billion billion in imports, primarily consumer electronics, clothing and machinery. This outweighed the still-significant $110.6 billion in exports. (Source: U.S. Census, U.S. Trade in Goods With China
However, it's important to note that many of these imports are actually 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.
Trade Deficit With Japan:
The second largest trade deficit is much smaller, only $76.3 billion. That's because U.S. trade with Japan
is much more balanced. The world's fifth largest economy needs the agricultural products, industrial supplies, aircraft and pharmaceutical products that the U.S. makes. Exports totaled $70.1 billion in 2012. Imports were higher, at $146.4 billion. Nearly $45 billion of this was automobiles, with industrial supplies and equipment making up another large portion. Trade was improving from the 2011 earthquake
, which slowed trade, making parts difficult to manufacture for several months. (Source: U.S. Census, Trade Balance with Japan
; U.S. Exports to Japan
Trade Deficit With Germany:
The U.S. trade deficit with Germany is only $59.7 billion. The U.S. exports $48.8 billion, a large portion of which is automobiles, aircraft and pharmaceuticals. However, the U.S. imports nearly twice as much ($108.5 billion) of some of the same types of things: automotive vehicles and parts, industrial machinery and medicine.(Source: U.S. Census, U.S. Trade Deficit With Germany
; U.S. Exports to Germany
, U.S. Imports from Germany
Trade Deficit With Canada:
The U.S. trade deficit with Canada is $31.8 trillion. However, this is just 5% of our total trade with them. Canada is America's largest trading partner, so a small deficit doesn't indicate that trade is out of balance. The U.S. exports $292.4 billion, and imports $324.2 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: U.S. Census, Trade With Canada
; U.S. Exports to Canada
; U.S. Imports from Canada
Trade Deficit With Mexico:
Other Trade Deficits Were Mainly Caused by America's Need for Oil:
America's next five largest trade deficits were created primarily with countries that supply oil or natural gas, but don't need America's products. However, U.S. deficits with these countries are declining as domestic supply of shale oil and gas is growing. The largest of these was Saudi Arabia, with a $37.5 billion deficit; Venezuela, with a $21.1 billion deficit, and Russia, with a $18.6 billion deficit. Ireland's deficit of $25.9 billion is based primarily on exports of pharmaceuticals. Italy's deficit of $21 billion is based on a wide variety of exports, including pharmaceuticals, industrial products, footwear and wine. (Sources: U.S. Census, U.S. Trade in Goods by Country
; Top Ten Countries With Which the U.S. Has a Trade Deficit
; U.S. Imports from Ireland; U.S. Imports from Italy). Article updated May 7, 2013