With the trade war between the US and China hotting up, we thought it might be worthwhile looking at US external trade for our #ICAEWchartoftheweek.
According to the US Bureau of Economic Statistics, US consumers and businesses paid $3.1tn to import goods and services in 2018, while US businesses generated $2.5tn from exports.
This gave rise to a net trade deficit of $622bn, reflecting a net deficit on goods of $891bn (imports $2,654bn - exports $1,672bn), partially offset by a net surplus on services of $269bn (exports $828bn - imports $559bn).
NAFTA members Canada and Mexico together constituted around a quarter of imports and exports, just ahead of trade with the European Union. This is an illustration of the gravity theory of trade, given that their economies are together less than one-sixth of the size of the EU's.
However, all eyes are on the US-China trade relationship. This has expanded dramatically over the last couple of decades, with imports of goods and services from China in 2018 amounting to $576bn in 2018 or 18% of the total, up from less than 7% twenty years ago.
China is also an increasingly important export market for US businesses, with exports to China of $231bn in 2018 equivalent to 9% of total exports, up from less than 2% twenty years ago.
Although both countries have benefited from this expansion in trade, the difference of $345bn between imports and exports constitutes over half of the US's overall trade deficit.
Despite the protestations of many economists, a number of politicians see large trade deficits as a bad thing. One of these is US President Trump, who has complained about the scale of the difference in the flow of goods and services between the world's two largest individual economies.
We don't know whether the US and China will be able to conclude a trade deal in coming weeks, or if the trade war will continue to escalate. Either way, what happens to this critical trade relationship between the world's two largest individual economies will have implications for the rest of the world too.
Global GDP was estimated to be approximately $83tn in 2018: US $21tn, EU-28 $19tn, China $13tn, Japan & South Korea $6tn, South & Central America $4tn, Canada & Mexico $3tn, Rest of the World $17tn.