U.S. Exports, Including Top Categories, Challenges, and Opportunities
Why Isn't America the World's Largest Exporter?
The United States exported $2.3 trillion in goods and services in 2017. That generated 12 percent of U.S. total economic output as measured by gross domestic product. Exports are a critical component of GDP.
America has the potential to export much more. That's because only 1 percent of U.S. businesses export. As a result, the United States is the world's third largest exporter. It falls behind China and the European Union, and barely edges out Germany.
Top U.S. Exports
The United States exports $1.55 trillion in goods, or two-thirds of all exports.Like most countries, the United States exports more goods than services. People can look, feel and easily compare the value of both local and foreign goods. They are more careful when it comes to services. They prefer relying on local people they know and trust.
Capital goods are the most successful export category. That's because U.S.-based corporations understand the needs of other multinational firms. Of the $533 billion in capital goods exported, 64 percent is from six categories.
- Commercial aircraft ($121 billion), produced by Boeing and Lockheed-Martin.
- Industrial machines ($57 billion), employing 1.3 million Americans.
- Semiconductors ($48 billion), primarily Intel and Qualcomm.
- Electric apparatus ($43 billion), mostly GE.
- Telecommunications ($38 billion).
- Medical equipment ($35 billion). Unlike most other U.S. export leaders, more than 80 percent of medical device companies are small businesses.
Next is industrial supplies and equipment. The United States exports $463 billion of materials used by manufacturers. Most of it is oil and oil-based products. Here again, the large multi-nationals do most of the trade. They are already familiar with the reputations, leaders and processes of their main suppliers.
The oil-based exports include these four categories.
- Chemicals ($77 billion). This segment is strong thanks to U.S. patent protection. One out of five patents are chemistry-related. Most of them are by-products of oil.
- Fuel oil ($38 billion). This is oil burned for fuel that's heavier than gasoline.
- Petroleum products ($71 billion). Exxon-Mobil, Chevron, and Conoco-Phillips are America's largest producers of oil.
- Plastic ($34 billion). This is a by-product of oil. The industry employs 900,000 workers.
Consumer goods make up 13 percent of U.S. exports, at $198 billion. This is mostly pharmaceuticals ($51 billion), cell phones ($27 billion) and gem diamonds ($21 billion). Consumer spending drives 70 percent of the economy. U.S. corporate experience in the domestic market creates a competitive advantage in the global market.
Automobiles are next, at 10 percent ($158 billion) of all goods exported. The Big Three U.S. automakers were GM, Ford and Chrysler until the 2008 financial crisis. The auto bailout forced them to become more efficient and globally competitive.
Agricultural products are a strategic export, at $133 billion. Agribusinesses receive U.S. government subsidies. That makes them lower-priced than foreign competitors. As a result, this category gets a big advantage from any trade agreements that get passed. The biggest agricultural exports are enhanced through bio-engineering and chemical additives. Both lower the cost of production. They are:
- Soybeans ($22 billion), which are mainly used for feed and are genetically engineered.
- Meat and poultry ($19 billion), which are raised using antibiotics.
- Corn ($10 billion), which is also genetically engineered.
Services contribute another third of total exports, at $778 billion. The services America exports the most are those that support the major goods categories. For example, the qualities that help U.S. companies to excel in commercial aircraft also help travel companies.
That's the largest service export, at $291 billion. Next is computer and other business services at $194 billion. Protection of intellectual property, royalties and license fees is $124 billion. Banking and other financial services export $121 billion in services. Government contracts, including defense, are $20 billion.
Why the United States Doesn't Export More
The United States imports more than it exports. Why can't it export more?
First, China, India and other emerging market countries have lower standards of living. That allows them to make consumer goods cheaper than U.S. workers can. In other words, they are better at producing some of the things U.S. consumers need than American companies are. They have the comparative advantage.
Second, some European and Japanese companies make better-quality automobiles than the U.S companies. Enough Americans prefer foreign cars to make Hondas, Toyotas and BMWs popular imports. Similarly, some foods are specialized to foreign countries: French croissants and wines, Mexican tequila and Greek feta cheese.
Third, the U.S. economy depends on oil. While oil is one of America's largest exports, it's also its biggest import. That's because Americans still use more oil than the country can produce. But is shifting thanks to shale oil production in Montana and Texas. The shale oil boom led to a bust. Oversupply caused the price of oil to fall, forcing some small companies out of business.
Why doesn't the United States just use all its domestic oil and cut imports? Geography is one reason. It's easier to export Montana oil to towns across the border in Canada than to ship it to Florida, for example. Also, some grades of oil are not high enough for U.S. consumption. They're shipped to other countries that can use them.
How U.S. Exports Fit Into the Balance of Payments
- Current Account
- Capital Account
- Financial Account