US Imports by Year for Top Five Countries

How These Countries Use Competitive Advantage to Trade With the United States

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Five countries make up over half of all U.S. imports. They are China, Canada, Mexico, Japan, and Germany. The United States imported the most goods from Canada until 2007 when China replaced our neighbor to the north. In 2017, these five countries supplied 58 percent of the $2.4 trillion in U.S. imports of goods.

What makes these countries such successful exporters? They have a comparative advantage in at least one of three areas.

Some are best at supplying low-cost goods. That's China, Canada, and Mexico. Germany provides high-quality items. Japan's strategy is to focus on specific products for targeted markets. They have adopted the most successful competitive advantage strategies that match each nation's strengths.

Here's what the United States imports from these 5 countries and why they're the best at producing these goods for the U.S. market.

  • China: China primarily exports electrical equipment. This would include computers and optical and medical equipment. It's also a big exporter of low-cost apparel, fabric, and textiles. A lot of China's exports are manufactured products made for U.S. companies. These companies pay to ship raw materials to China. There the low-cost factory workers process the materials into the final product. 
  • Canada: Almost 75 percent of Canada's exports go to the United States, thanks to the North American Free Trade Agreement. Since 1994, trade between the NAFTA partners has tripled. Canada has abundant supplies of oil, gas, and uranium. 
  • Mexico: The other member of NAFTA sends even more of its exports to the United States (78 percent). Mexico's No. 1 export is manufactured products, for many of the same reasons. If it weren't for the drug cartels, Mexico could become the next China. 
  • Japan: Japan's biggest export to the United States is fuel-efficient and reliable automobiles, like Toyotas and Hondas. It also supplies machinery, medical instruments, and aircraft. Japan supplies a lot of parts. Japan's earthquake and nuclear disaster created a global economic slowdown due to a reduced export of parts. To make its products more competitive in the U.S. market, Japan's central bank keeps the value of its currency, the yen, low. That's contributed to the yen carry trade and made Japan one of the largest holders of U.S. debt
  • Germany: Germany's biggest export to the United States is high-end automobiles, like BMW, Porsche, and Mercedes-Benz. It also exports pharmaceuticals, machinery, and equipment.

                          Imports in Goods (Billions of Dollars)

2004196.7255.9155.8129.6  77.2 
2005243.5287.9170.2138.1  84.8 
2006287.8303.4198.3148.1  89.1 
2007321.5313.1210.8145.5  94.4China overtakes Canada as #1.
2008337.8335.6215.9139.2  97.6 
2009296.4224.0176.5  94.9  71.3Recession lowered all trade.
2010364.9276.5229.7120.3  82.7China, Mexico regain 2008 level.
2011399.3316.5263.1128.8  98.4Japan, Germany regain 2008 level.
2012425.6324.2277.7146.4108.5Japan hit record.
2013  440.4332.1280.5138.5114.6 
2014466.7346.1294.2133.9123.2Canada, Germany hit record.
2015481.9295.2294.7131.1  71.8 
2017505.6299.9314.1136.5117.8China, Mexico imports hit record.

              (Source: "Top Trading Partners," U.S. Census, December 2017.)