US Trade Deficit by Country, With Current Statistics and Issues

Why America Cannot Just Make Everything It Needs

Dock workers accepting imports
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The U.S. trade deficit in goods and services was $616.8 billion in 2019. Imports were $3.1 trillion and exports were only $2.5 trillion.

In 2019, the U.S. trade deficit in goods alone was $866 billion. The United States exported $1.65 trillion in goods. The biggest categories were commercial aircraft, automobiles, and food. It imported $2.51 trillion. The largest categories were automobiles, petroleum, and cell phones. 

Key Takeaways

  • The United States runs a trade deficit with all its five major trading partners: China, Mexico, Japan, Germany, and Canada.
  • America’s highest trade deficit is with China.
  • The United States imports more goods than it exports because its trading partners can produce these at much better prices or quality.

Why America Can't Just Make Everything It Needs

The United States could make almost everything it needs. But some countries can make products just as well for a lower price. It makes more sense to pay less for these goods.

In some products, America has a comparative advantage. These are agricultural products and industrial supplies like organic chemicals. They also include capital goods like transistors, aircraft, motor vehicle parts, computers, and telecommunications equipment. 

The United States runs a deficit with countries which fit at least one of the following categories:

  1. They can produce things more cheaply than the United States can, such as consumer products or oil. That is changing with increased U.S. production of shale oil.
  2. They don't need what America is good at making. 
  3. They trade a lot of everything with the United States, but America imports more than it exports.

Top Five Trade Partners

Most U.S. trade partners have deficits that fall into the first two categories. The two largest are China and Japan. Some of the largest deficits are with countries in the third category. They are Canada, Mexico, and Germany.

The countries with which the United States has the largest trade deficits in goods are not always its most important trading partners. Some nations export a lot without importing much. But the top five trading partners also have the largest deficits.

  1. Mexico - $615 billion traded with a $102 billion deficit.
  2. Canada - $612 billion traded with a $27 billion deficit.
  3. China - $559 billion traded with a $346 billion deficit.
  4. Japan - $218 billion traded with a $69 billion deficit.
  5. Germany - $188 billion traded with a $67 billion deficit.

The chart below shows the percentage of trade for the top five U.S. trading partners as of 2019. The first tab shows percentages based on the total volume of goods traded by all five countries. The second tab shows percentages based on the sum of all their deficits. Please note that the Census provides trade data by country for goods only, not services.

The Largest U.S. Deficit Is With China

More than 40.5% of the U.S. trade deficit in goods is with China. The $346 billion deficit with China was created by $452 billion in imports. The main U.S. imports from China are consumer electronics, clothing, and machinery. 

Many of these imports are actually made by American companies. They ship raw materials to be assembled in China for a lower cost. They are counted as imports even though they create income and profit for these U.S. companies. This practice results in many outsourced manufacturing jobs.

America only exported $107 billion in goods to China. The top three exports were agricultural products, aircraft, and electrical machinery.

The United States Has a Deficit With Its NAFTA Partners

Canada, the United States, and Mexico are partners in the world's largest trade agreement, the North American Free Trade Agreement

The second-largest U.S. trade deficit is with Mexico at $102 billion. Exports are $256 billion, mostly auto parts and petroleum products. Imports amount to $358 billion, with cars, trucks, and auto parts being the largest components. 

The trade deficit with Canada is $27 billion. The United States exports $293 billion to Canada, more than it does to any other country. It imports $320 billion. The largest export by far is automobiles 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. 

Japan and Germany Are Third and Fourth

The third largest trade deficit is $69 billion with Japan. The world's fifth largest economy needs the agricultural products, industrial supplies, aircraft, and pharmaceutical products that the United States makes.

Exports totaled $75 billion. Imports were higher, at $144 billion. Automobiles comprised much of the imports. Industrial supplies and equipment made up another large portion. Trade has improved since the 2011 earthquake, which slowed the economy and made auto parts difficult to manufacture for several months.

The fourth largest U.S. trade deficit is with Germany at $67 billion. The United States exports $60 billion. A large portion of this is comprised of automobiles, aircraft, and pharmaceuticals. It imports $127 billion in similar goods: automotive vehicles and parts, industrial machinery, and medicine.

The Trade Deficit by Country and the Balance of Payments

Article Sources

  1. United States Census. “Exhibit 1. U.S. International Trade in Goods and Services,” Accessed Feb. 20, 2020.

  2. United States Census. “Exhibit 7. U.S. Exports of Goods by End-Use Category and Commodity,” Accessed Feb. 20, 2020.

  3. United States Census. “Exhibit 8. U.S. Imports of Goods by End-Use Category and Commodity,” Accessed Feb. 20, 2020.

  4. United States Census. “Exhibit 1. U.S. International Trade in Goods and Services,” Accessed Feb. 20, 2020.

  5. United States Census. “U.S. Trade in Goods by Country,” Accessed Feb. 20, 2020.

  6. United States Census. “Trade Goods with China,” Accessed Feb. 20, 2020.

  7. Office of the United States Trade Representative. “The People’s Republic of China,” Accessed Feb. 20, 2020.

  8. United States Census. “Trade in Goods with Canada,” Accessed Feb. 20, 2020.

  9. United States Census. “Trade in Goods with Japan,” Accessed Feb. 20, 2020.

  10. Central Intelligence Agency. “The World Factbook. “Country Comparison: GDP (Purchasing Power Parity,” Accessed Feb. 20, 2020.

  11. United States Census. “Trade in Goods with Germany,” Accessed Feb. 20, 2020.