In 2019, the U.S. trade deficit in goods alone was $866 billion. The United States exported $1.65 trillion in goods. The biggest categories were commercial aircraft, automobiles, and food. It imported $2.51 trillion. The largest categories were passenger cars, cell phones, and pharmaceutical preparations.

Why America Can’t Just Make Everything It Needs

The United States could make almost everything it needs. But some countries can make products just as well for a lower price. It makes more sense to pay less for these goods. In some products, America has a comparative advantage. These are agricultural products and industrial supplies like organic chemicals. They also include capital goods like transistors, aircraft, motor vehicle parts, computers, and telecommunications equipment.  The United States runs a deficit with countries that fit at least one of the following categories:

Top Five Trade Partners

Most U.S. trade partners have deficits that fall into the first two categories. The two largest are China and Japan. Some of the largest deficits are with countries in the third category. They are Canada, Mexico, and Germany. The countries with which the United States has the largest trade deficits in goods are not always its most important trading partners. Some nations export a lot without importing much. But the top five trading partners also have the largest deficits. The chart below shows the trade for the top five U.S. trading partners as of 2019. The first tab shows the volume of goods traded by each country. The second tab shows the deficits. Please note that the Census provides trade data by country for goods only, not services.

The Largest U.S. Deficit Is With China

More than 42.1% of the U.S. trade deficit in goods is with China. The $346 billion deficit with China was created by $452 billion in imports. The main U.S. imports from China in 2018 were electrical machinery, machinery, and furniture, and bedding. Many of these imports are actually made by American companies. They ship raw materials to be assembled in China for a lower cost. They are counted as imports even though they create income and profit for these U.S. companies. This practice results in many outsourced manufacturing jobs. America only exported $107 billion in goods to China. The top three exports in 2018 were aircraft, machinery, and electrical machinery.

The United States Has a Deficit With Its NAFTA Partners

Canada, the United States, and Mexico are partners in the world’s largest trade agreement, the North American Free Trade Agreement.  The second-largest U.S. trade deficit is with Mexico at $102 billion. Exports are $256 billion, mostly auto parts and petroleum products. Imports amount to $358 billion, with cars, trucks, and auto parts being the largest components. The trade deficit with Canada was $27 billion in 2019. The United States exported $293 billion to Canada, more than it does to any other country. It imported $320 billion. The largest export by far is automobiles and parts. Other large categories include petroleum products and industrial machinery and equipment. The largest import is crude oil and gas from Canada’s abundant shale oil fields. 

Japan and Germany Are Third and Fourth

The third-largest trade deficit in 2019 was $69 billion with Japan. The world’s fifth-largest economy needs the agricultural products, industrial supplies, aircraft, and pharmaceutical products that the United States makes. Exports totaled $75 billion in 2019 Imports were higher, at $144 billion. Automobiles comprised much of the imports. Industrial supplies and equipment made up another large portion. Trade has improved since the 2011 earthquake, which slowed the economy and made auto parts difficult to manufacture for several months. The fourth-largest U.S. trade deficit in 2019 was with Germany at $67 billion. The United States exported $60 billion. A large portion of this was comprised of automobiles, aircraft, and pharmaceuticals. It imported $127 billion in similar goods: automotive vehicles and parts, industrial machinery, and medicine.

The Trade Deficit by Country and the Balance of Payments

Balance of Payments