U.S. Exports Matter
Why does this matter? Because the share of total exports as a share of gross domestic product has steadily grown. The growth in U.S. exports over the past five years has played a significant role in the nation’s recovery from the recession. Trade is without question a bigger piece of the U.S. economy than it was in the early 1990s, when the last major trade deal, the North American Free Trade Agreement, was negotiated.
Last year was a record year for U.S. exports, according to data from the Bureau of Economic Analysis, exports totaled $2.34 trillion, equal to 13.4% of gross domestic product (up from 9.7% in 1992). Imports were $2.88 trillion, or 16.5% of GDP (up from 10.2% in 1992); the difference between the two is the trade deficit. 2014 was also the fifth year in a row that American exports hit record highs. In addition, America reached record export levels with 52 of its trading partners in 2014, including with Canada, Mexico, and even China.
Exports have been hurt this year by the rising value of the dollar, which makes U.S. goods less competitive on overseas markets. Canada, America’s largest trading partner, is in a recession. And China, the world’s second largest economy, is growing more slowly. Meanwhile, many emerging market economies are being battered by a plunge in commodity prices. The declines are partly because of expectations of higher interest rates in the United States, which have pushed the value of the dollar higher, reflecting the strength of America’s economy relative to its trading partners’.
Still, though, plenty of goods are moving back and forth every day between U.S. companies and overseas customers or suppliers. The U.S. remains a major manufacturing hub for the world’s airplanes, primarily sold to Britain, China, Japan, France and the United Arab Emirates. The U.S. also specializes in refining fuels and Texas, New Jersey and Mississippi report their major export to be either petrol or gasoline. Other exports reflect major industries that are particularly active in a given state — Michigan exports trucks, Maine sends lobsters and Iowa supplies the world with corn. Meanwhile, crude oil is still a leading import for states including Ohio and Pennsylvania as well as a large swath of the South and West.
Despite government restrictions on crude-oil exports, $11.6 billion worth was shipped overseas last year, more than twice the level in 2013. Texas sold nearly $34 billion in petroleum products overseas last year, and crude was the state’s top import. According to the Census Trade Data, The U.S. bought $246.5 billion worth of overseas crude last year. Along with various other petroleum products, natural gas and other energy sources, energy imports in 2014 totaled nearly $355 billion.
The U.S. trade deficit is the nation’s largest in six years. The U.S. buys far more products than it sells to the rest of the world, the nation’s trade deficit ballooned to its largest level since the 2007-09 financial crisis. In recent years, the biggest trade deficits were recorded with China, Japan, Germany and Mexico. The U.S. trade gap increased to $48 billion in August of 2015. Total exports decreased to $185 billion, total imports rose to $233 billion.
The U.S. has been running consistent trade deficits since 1976 due to high imports of oil and consumer products. And does running a deficit really matter? Many economists say a modest trade deficit isn’t necessarily a bad thing. It often seems to be forgotten that one person’s import is another person’s export, and total exports globally must be equal to total imports. When talking about U.S. growth and its impact on the rest of the world, slowing US GDP growth is not necessarily a bad thing – if domestic demand is growing faster than GDP, then the country is contributing demand to the rest of the world. When domestic demand is growing faster than GDP, a country is contributing demand to the rest of the world. And since borrowing costs are extremely low and the economy is strengthening, that’s not really a problem for the U.S.–right now.
There is always room for improvement when it comes to removing barriers and opening up markets for U.S. exports, which is why the United States enters Free Trade Agreements (FTAs) with its trading partners. The United States now has trade agreements with 20 partner countries. Through the negotiation of 21st Century trade agreements – including the new efforts of the Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership, Trade in Services Agreement, and World Trade Organization’s (WTO) Environmental Goods Agreement – the U.S. government clears a pathway that opens more global opportunities for American firms, farmers, ranchers, investors and innovators.
While some may say that the days of American global dominance in manufacturing are gone forever, the truth is that the United States has been and remains strong as a leading exporter of both goods and services. By continuing to open new markets for U.S. exports, America can strengthen its economy and help bring prosperity to millions of Americans and their families.