Exporting goods is an essential component of most economies. Manufacturers wouldn’t be able to stay in business if they only sold their products in the countries in which they are based. Everything from apples to zinc is traded across the globe, but many Americans may want to know, what does the US export?
United States Exports
The US is the third largest exporter of goods in the world behind China and the European Union. Their exports accounted for $1.57 trillion in goods in 2017, which is only about 13% of the Gross Domestic Product. Here are five of the US’ top exports.
Machinery, which includes computers, accounts for about 13% of the country’s total exports. Along with computers, machinery includes:
- Construction Machinery
- Agricultural Equipment
- Turbines and Turbine Generator Sets
- Engine Equipment
- Industrial Process Controls
These goods are sent to many places around the globe, including Canada and Mexico, who are usually the largest importers of American machinery. Other importers include:
- South Korea
- United Kingdom
The US may be one of the top exporters of electric machinery in the world, but it is also one of the top importers. Electrical machinery is a term used for electric motors, electric generators, and electromagnetic machines.
Electric motors are used to convert electricity to mechanical power. Conversely, electric generators do the opposite by converting mechanical energy into electricity. The top importers of US electrical machinery are:
US mineral fuels exports account for about $140 billion each year. Mineral oils include:
- Natural Gas
- Crude Oil
- Heavy Oils
Mineral oils are also known as fossil fuels. Several states produce mineral oils for domestic use and exports, including:
- Texas, Mississippi, and New Jersey – Petrol
- North Dakota – Crude Oil
- Montana, Pennsylvania, and West Virginia – Coal
- Illinois – Gasoline
Aircraft and Spacecraft
The US is the world’s leader in large civil aircraft exports, which are passenger airliners. Some of the other air- and spacecraft that they export are:
- Rotorcraft – This category includes helicopters and autogiro for military, emergency medical service, oil and gas exploration, and law enforcement use.
- Commercial Spacecraft
- General Aviation Aircraft – Included in this category are piston aircraft, turboprops, jets, balloons, blimps, and experimental aircraft.
- Aircraft Engines
- Unmanned Aircraft Systems
Air- and Spacecraft exports come from 13 states, many of which also export airplane parts and equipment. These exports account for about 8.5% of the country’s total exports, totaling $131 billion.
Although the auto industry almost went bankrupt, vehicles are the fifth largest export in the country. It includes light vehicles like passenger cars, trucks, and sport utility vehicles. Along with US automakers like Fiat Chrysler, Ford, and General Motors, the US assembles and exports Japanese brands like:
Many European automakers also use the US as the base for their exports. These brands include:
- Mercedes Benz
Hyundai Motors, which is a Korean company, wants to use their US factory to export more of their cars as well. The most prominent importers of US vehicles are Canada, Mexico, Germany, Saudi Arabia, and China.
These five categories account for 50.1% of the US’ total exports. The next five categories combine for only 18.5% of all US exports. These items also answer the question, what does the US export? They include:
- Optical, technical, and medical equipment.
- Plastic and plastic articles.
- Gems and precious metals.
- Organic chemicals.
Although the US was once a major exporter of agricultural products like foods, beverages, and feed, it now only accounts for 9% of all exports. The most exported items are soybeans, meat and poultry, and corn. US food exports have fallen due to its food processing standards.
Why Exports are Important
During discussions about the US economy, invariably trade is mentioned. Ideally, exports will outnumber imports because a trade deficit, which is when there are more imports than exports, can affect employment and the price of goods.
If there are more exports than imports, then there is a trade surplus. The strength of the dollar can be a factor in whether there are more exports than imports. When there are more exports, the dollar strengthens, and prices for these goods usually rise.
While a strong dollar is usually a good sign for the economy, if prices in other countries for American goods are too high, then consumers will stop buying them. Then, fewer goods are ordered, there is a slowdown in production, and the US economy can be adversely affected.
If there are more imports than exports, then the dollar can weaken, and prices for US exports go down. Lower prices can lead to more US goods being bought, new orders for them being sent to companies, and a rise in employment.
US exports increased in 2017, but at a slower pace than imports. While the trade deficit fluctuated throughout the year, it now stands at $566.1 billion, which is the highest it’s been since 2008.
US Trade Deficit
Since 1975, the US has had the world’s largest trade deficit, which means it imports more goods than it exports. Although the current deficit is at $566 billion, that is less than the record deficit of $762 billion in 2006.
The trade deficit in the US is driven by importing consumer goods and vehicles. Consumer goods include electronics, generic drugs, clothing and household items. While the US exported $198 billion in consumer goods, it imported over $602 billion, which is a $404 billion deficit.
The US also has a trade deficit due to oil and other fuels. While US oil imports have fallen, $183 billion in petroleum products were imported in 2017, and the country only exported $71 billion, leaving a deficit of $112 billion.
Oil imports have reduced in recent years because new shale reserves have been discovered and developed. Now, there is an oversupply of crude oil, natural gas, and other fuels, so they are sold to countries who need them.
Reasons for US Trade Deficit
While the US can produce almost everything the country needs, other countries can make the same goods with the same quality for a lower price. So, these goods are imported, and businesses use their savings to invest in other areas.
Three criteria that fit the countries with which the US runs a deficit are:
- They are able to produce goods less expensively than the US.
- They don’t need to the goods America produces.
- They trade most everything with the US, but since the US imports more, there is a trade deficit.
While Canada is one of the country’s main trading partners, the US has a trade deficit with their neighbors from the north of about $18 billion. Canadian to US imports include:
- Crude Oil
- Large and Mid-Sized Vehicles
- Natural Gas
- Potassium Chloride
The US also exports oil, petroleum, natural gas, and small trucks, large and mid-sized passenger cars, and natural gas to Canada. The location of fuel reserves in comparison to where they are needed is the main reason the two countries often buy them from each other.
Trade Deficit’s Effect on Economy
A large trade deficit is bad for the economy for two reasons:
- The deficit is largely financed by debt.
- The US becomes less competitive.
Although the US imports some products because they can be bought cheaper than they can be produced, they often buy them by borrowing from their trading partners.
This debt can be called in at any time by a country because it needs an influx of money or over political disputes. Right now, the US owes China about $1.2 trillion, which they can ask for whenever they want too.
When the US imports the same goods for several years, they become less likely to continue production of them in the US, which can result in losing factories and outsourcing jobs to other countries. This lack of competitiveness is why shoes, steel, and electronics are no longer made in America.
The US had lost its competitive edge during the Great Recession in the late-2000s and dropped from being the most competitive country to number seven in the world in 2012-2013. However, it has rebounded and was named the second most competitive country in the world, behind Switzerland, in 2017.
The reason for its recent success is the country’s ability to be innovative. Innovation has become more important around the globe, and the ability of US companies to innovate and their business acumen are two reasons for the improved competitiveness.
If you’ve wondered what type of economy does the United States have, it is a mix of capitalism and socialism. This mix helps protect property while providing more freedom for the use of capital. However, the government can also manipulate economic activities to help achieve social goals.
This information not only tells you what does the US export, but it provides information about which goods are doing well and which need help.
Consumers can help reduce the trade deficit by buying products labeled “made in the USA” and avoiding those made in other countries. Buying locally made products also keeps your neighbors employed and improves the overall local and national economies.