Trade Essay: US Trade Scenario.

The International Trade Administration in the Department of Commerce keeps an up-to-date

Access the following website with the easiest to access U.S. trade data. See http://tse.export.gov for their Trade Stats Express page. Data also provided for state exports.

(Everything you might want to know about these data series, and then some, is available on the Census Bureau’s Website in their Foreign Trade section. 

Please find at least one journal article in the LIRN about free trade agreements and use it to support your position when you respond to questions 5 and six below.

Using the Trade Stats Express page, write a 4-5 page paper in response to the following questions:

1.What are the leading U.S. exports and imports regarding value?
2.Which trading partners are most important to the United States? This can be measured regarding total exports, total imports, or total exports plus imports.
3.Which countries have the largest trade deficits and trade surpluses with the United States?
4.Find the trading statistics for the U.S. and Canada, and the U.S. and Mexico.
5.When the United States signed a free-trade agreement with Canada (1989), no one thought twice about it. When the agreement with Mexico was signed (1994), there was significant opposition. Use the concepts of interindustry and intra-industry trade to explain the differences in opposition to the two trade agreements.
6.Given the current trading statistics of U.S. trade with Canada and Mexico, does the opposition to the agreements seem justified?

Major Exports and Imports of the United States

Trade plays an important role in economic growth of United State. In the world economy, US is the largest importers and exporters of goods and services. The export industries support huge employment and make significant contribution in improving living standard. Every billion of goods and services exported from US to different other nations support nearly 5600 jobs in the economy. The expansion of trade support business and families in US in several ways. Trade supports productive and different high paying jobs in the export sector (ustr.gov, 2018). Trade helps in expansion of variety of goods and services as purchased and consumed by both business and consumers. Expansion of trade also encourages investment which is supportive to economic growth of the nation.

The objective of the paper is to outline the trade scenario of United State. The primary focus of the paper include major export and imported items of US, major trading partners and size of deficit and surplus of US with its major trading partners. Countries having similar kind of resources engage in intra industry trade, that is trade between similar industries. Canada and Mexico are the two major trading partners of United State. US and Canada signed free trade agreement in 1989 without much criticism. The same with Mexico in the year 1994 however has been contested widely (Delgado, Garcia & Michel, 2018) The paper sheds light on the debate related to free trade agreement between these nations.

Figure 1: Exported goods in terms of value

Figure 2: Exported items with respective share

In terms of value, the largest valued exported item is Transportation and Equipment constituting 18 percent of total export. The computer and electronic items valued 208,126, 018, 965 dollar and accounts 13.5% share in total export (export.gov, 2018).  The next two categories of export having higher value in the basket of exported items are chemicals and machinery except electrical.

Regarding import, the highest valued imported item is computer and electrical products. The corresponding value of import is 400, 564, 139, 493 with import share being 17.10 percent. T Transportation and equipment import account 16.5% import share with a value of 385.650, 918,669 dollars (census.gov, 2018). Chemicals and machinery excluding electrical account 9.3% and 7.2% of the import share respectively.

The importance of trading partners can be understood from the respective values of export, import and combined value of export and import.

Trading Partners of the United States

Figure 5: Export partners according to value

In term of export value, the top ten countries are China, Mexico, Canada, Japan, Germany, South Korea, United Kingdom, Italy, France, Ireland and India. China and Mexico are the two most important export partners of US.

Figure 6: Import partners according to value

A shown from the above figure, the top ten import partners are Canada, Mexico, China, Japan, United Kingdom, Germany, South Korea, Netherlands, Hong Kong and Brazil. Canada and Mexico are the two most import trading partners of United State (export.gov, 2018).

Figure 7: Trading partners according to total trade volume

In terms of aggregate trade volume, the top ten trade partners of United State are China, Canada, Mexico, Japan, Germany, South Korea, United Kingdom, France, India and Italy.  

Figure 8: Countries with largest trade surplus with US

Based on US trade merchandise trade statistics, the top five countries having considerably larger trade surplus are Hong Kong, Netherland, United Arab Emirates, Belgium and Australia.

Figure 9: Countries with largest trade deficit with US

China has the largest trade deficit with United State followed by Mexico, Japan, Germany Viet Nam and Canada (census.gov, 2018).

Figure 10: Trade statistics between US and Canada

Volume of traded goods and services between US and Canada valued $673.1 billion in 2017. As shown from the above graph, volume of import and export increases since 2009. Imports are however higher than import constituting a trade deficit. Since 2014, import started to fall narrowing the trade deficit. Top categories of US export to Canada include Vehicles, machinery, mineral fuels, electrical machinery and plastic (ustr.gov, 2018). In the imported goods, major items include mineral fuels, plastics, machinery and special others.

Figure 11: Trade statistics between US and Mexico

Traded goods and services between US and Mexico valued $615.9 million in 2017. As shown from the graph above both import and export increases in the last ten years. The imports from Mexico is considerably larger than that of export. The gap between import and export increases significantly overtime representing a growing trade deficit (ustr.gov, 2018). Goods exported from US to Mexico include electrical machinery, vehicles, plastic and machinery and agricultural products. The major imported items of US are vehicles, optical and medical instrument, machinery and electrical machinery.

The effective trade agreement between Canada and United State was signed in 1989. As the two countries have almost similar type of endowments intra-industry trade occurs between these two nations. The intra industry trade refers to exchange of goods for similar kind of goods. Inter industry trade on the other had refers to trade between different industries (Madeira, 2016) Intra industry trade between US and Canada are observed for food and live products. More than 20 percent of US export goes to Canada while the corresponding import share is 14%. In order to encourage barrier free movement of goods and services between the two nations free trade agreement was signed which effectively increased volume (Greenaway & Milner, 2016).

Major Trade Deficits of the United States

Mexico is another important trading partner of United State. US exported items to Mexico accounted to be 15% while import accounts 13% (Nevitte, 2017) Intra industry trade occurs in goods related to Automobiles, Food and beverages, Capital goods and transportation equipment. However, there free trade agreement between US and Mexico faced several opposition. Critics argued that free trade agreement between US and Mexico might hurt US economy. Following free trade agreement US jobs were lost (Anderson & Yotov, 2016) As labor is relatively cheaper in Mexico, US firms would hire Mexican laborers in US manufacturing. Barrier free trade also suppressed wages in several industries of US. It was proposed that the Mexico would be benefitted at the cost of US and Canada. In economic terms, Mexico might benefit from free trade treaty.

Conclusion 

The study on US trade statistics reveal that the major export of US are transportation equipment, computer and electrical products, chemicals, machinery except electrical with transport accounting the largest share. The top imports of US are Computer and electronic products, Transport equipment, Chemicals, machinery excluding electrical. In the imported category, computer and electronic products accounts the highest share. The major export partners of US are China, Canada, Mexico, Japan and Germany. Hong Kong, Netherlands, United Arab Emirates, Belgium and Australia maintain a considerable trade surplus with US. US has trade deficit with nations like China, Mexico, Japan, Germany, Viet Nam and Canada. For both the nations Canada and Mexico US has a trade deficit. The deficit however is larger for Mexico as compared to Canada. Despite having huge trade dependency, free trade agreement between US and Mexico were criticized on the ground that gain of Mexico might offset the gain to US and Canada.

References list 

Anderson, J. E., & Yotov, Y. V. (2016). Terms of trade and global efficiency effects of free trade agreements, 1990–2002. Journal of International Economics, 99, 279-298.

Delgado, J. E. R., Garcia, J. G., & Michel, A. L. (2018). Relocation of Investment and Trade Diversification in APEC: Trends and Challenges for Mexico. Advances in Management and Applied Economics, 8(2), 61-69.

Greenaway, D., & Milner, C. (2016). Significance of Intra-Industry Trade. Causes of Changes in the Structure of International Trade, 1960-85, 60.

Kafchinski, J. (2018). US International Trade Data - Foreign Trade - US Census Bureau. Retrieved from https://www.census.gov/foreign-trade/guide/sec2.html#source_exp

Madeira, M. A. (2016). New trade, new politics: intra-industry trade and domestic political coalitions. Review of International Political Economy, 23(4), 677-711.

Nevitte, N. (2017). The North American Trajectory: Cultural, Economic, and Political Ties among the United States, Canada and Mexico. Routledge.

tse.export.gov. (2018). TradeStats Express. Retrieved from https://tse.export.gov/tse/MapDisplay.aspx

ustr.gov. (2018). Benefits of Trade | United States Trade Representative. Retrieved from https://ustr.gov/about-us/benefits-trade

ustr.gov. (2018). Canada | United States Trade Representative. Retrieved from https://ustr.gov/countries-regions/americas/canada

ustr.gov. (2018). Mexico | United States Trade Representative. Retrieved from https://ustr.gov/countries-regions/americas/mexico