Who Trades the Most with the U.S.?

July 04, 2019


Who are the U.S. main trading partners? And this is relevant because we want to know who's giving us the resources in some sense. And as I mentioned before, we know that if a country is running a current account deficit, there has to be another one that is running a current account surplus. Because when we sum them up, they have to sum up to zero.

So who are the main U.S. trading partners? The main US trading partners are Mexico, Canada, China, France, Germany, U.K., and South Korea. Those are the main partners. But of course, we know that there's one of them that is more important than everyone else. And I guess is in everyone's mind. So China is the main trading partner of the U.S.

And here we have a plot of the goods and services trade balance in the blue. Again, in red, we have the goods balance. And in green, we have the service balance. You can see that in terms of more or less the trend and whether it's positive or negative, we are getting exactly the same when we just look at the situation vis-a-vis China than when we look at the aggregate.

Meaning that the U.S. exports services to China, we import goods. And as a result because the imports of goods is much, much, much larger than what we are exporting services. When we look at the trade balance of goods and services, it's still negative, slightly less so than the one for goods, but still very negative, OK? So overall, the deficit with China nowadays is around 2% of GDP. And that's what that negative 2% means in there.

The U.S. has several significant trading partners, but China stands out the most. In this video clip from a recent Dialogue with the Fed event, Senior Economist Paulina Restrepo-Echavarria discusses the U.S.’s main trading partners, then focuses specifically on China.

Restrepo-Echavarria notes that the U.S. is a net exporter to China when it comes to services. However, it is a net importer of goods from China on a much larger scale, giving the U.S. a negative trade balance with China.

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