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Visualized: The Largest Trading Partners of the U.S.

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Infographic highlighting the largest trading partners of the U.S.

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Visualized: The Largest Trading Partners of the U.S.

The United States is the world’s biggest goods importer making it a powerhouse in the global movement of goods.

With so many imports, it goes without saying that the country has a significant goods deficit with many of its trading partners. The deficit with China, for example, is $383 billion. Meanwhile, the total goods trade deficit is nearly $1.2 trillion and it increased by 9% in 2022.

Given that the country has trade relations with more than 200 countries, regions, and territories, this network of relationships is complex. This visual, using data from the U.S. Bureau of Economic Analysis, makes trade relationships easier to understand, ranking the biggest trading partners of the U.S. in terms of goods trade alongside the value of exports and imports.

A Closer Look At U.S. Trade Balances

Trade balances are characterized in two ways: deficits and surpluses.

Each balance is determined by calculating the difference in U.S. exports and imports with a given trade partner. So while the balance with Ireland is a deficit of $66.1 billion, the balance with the Netherlands is a surplus of $38.3 billion.

RankCountryExports Imports Balance
#1🇨🇳 China$153.8 B$536.8 B-$382.9 B
#2🇲🇽 Mexico$324.4 B$454.9 B-$130.6 B
#3🇻🇳 Vietnam$11.4 B$127.5 B-$116.1 B
#4🇨🇦 Canada$356.1 B$437.7 B-$81.6 B
#5🇩🇪 Germany$72.9 B$146.6 B-$73.7 B
#6🇯🇵 Japan$80.3 B$148.3 B-$68.0 B
#7🇮🇪 Ireland$16.0 B$82.0 B-$66.1 B
#8🇹🇼 Taiwan$43.7 B$91.8 B-$48.1 B
#9🇰🇷 South Korea$71.5 B$115.3 B-$43.9 B
#10🇹🇭 Thailand$15.6 B$58.7 B-$43.1 B
#11🇮🇹 Italy$27.4 B$69.1 B-$41.7 B
#12🇮🇳 India$47.3 B$85.7 B-$38.3 B
#13🇲🇾 Malaysia$18.1 B$54.8 B-$36.6 B
#14🇮🇩 Indonesia$10.0 B$34.6 B-$24.6 B
#15🇨🇭 Switzerland$36.9 B$59.5 B-$22.6 B
#16🇦🇹 Austria$4.8 B$17.8 B-$13.1 B
#17🇷🇺 Russia$1.7 B$14.5 B-$12.7 B
#18🇸🇦 Saudi Arabia$11.6 B$23.5 B-$11.9 B
#19🇫🇷 France$45.8 B$57.4 B-$11.5 B
#20🇸🇪 Sweden$7.7 B$17.1 B-$9.4 B
#21🇿🇦 South Africa$6.5 B$14.6 B-$8.1 B
#22🇮🇱 Israel$14.2 B$21.4 B-$7.2 B
#23🇵🇭 Philippines$9.3 B$16.2 B-$6.9 B
#24🇫🇮 Finland$2.7 B$8.7 B-$6.1 B
#25🇭🇺 Hungary$2.9 B$7.7 B-$4.8 B
#26🇨🇿 Czechia$3.8 B$7.5 B-$3.7 B
#27🇳🇴 Norway$4.7 B$6.7 B-$2.0 B
#28🇩🇿 Algeria$1.2 B$3.1 B-$1.9 B
#29🇳🇬 Nigeria$3.4 B$4.8 B-$1.4 B
#30🇵🇱 Poland$11.3 B$11.9 B-$5.8 B
#31🇻🇪 Venezuela$2.3 B$0.4 B+$1.9 B
#32🇨🇴 Colombia$20.6 B$18.6 B +$2.0 B
#33🇪🇸 Spain$26.5 B$23.1 B+$3.4 B
#34🇪🇬 Egypt$6.6 B $2.8 B+$3.7 B
#35🇦🇷 Argentina$12.9 B$6.9 B+$5.9 B
#36🇨🇱 Chile$23.3 B$15.6 B+$7.7 B
#37🇧🇪 Belgium$35.5 B$26.8 B+$8.8 B
#38🇬🇧 United Kingdom$77.3 B$64.0 B+$13.3 B
#39🇦🇺 Australia$30.2 B$16.2 B+$14.0 B
#40🇸🇬 Singapore$46.2 B$31.6 B+$14.5 B
#41🇧🇷 Brazil$53.6 B$39.0 B+$14.6 B
#42🇭🇰 Hong Kong$25.9 B$4.8 B+$21.1 B
#43🇳🇱 Netherlands$72.9 B$34.6 B+$38.3 B
Total $2.07 T$3.25 T-$1.18 T

Note: Balances may not add up exactly due to rounding. Smaller trade relationships excluded on above table.

The U.S.’ largest trading partners are some of the world’s biggest exporters. ‘Made in China’ is ubiquitous for a reason. Manufacturing in places like Vietnam is playing a more essential role in the global economy, and thus the country shows up prominently on the chart above. Taiwan is also a major player due to its dominance in the semiconductor market.

Additionally, some of the most important partners are a case of proximity. Canada and Mexico are members of the USMCA agreement (which replaced NAFTA), making North America one of the world’s largest free trade zones. The U.S. dollar is typically stronger than the Canadian dollar and Mexican peso, making imports from Canada and Mexico relatively cheaper for U.S. consumers and businesses. Mexico’s lower labor costs and Canada’s petroleum surplus both play a role in trade imbalances as well.

While number one in terms of imports and services exports, the U.S. is the 2nd biggest goods exporter globally, revealed in its trade surpluses with countries like Hong Kong and the UK.

What’s Being Traded?

Without context, the chart above simply consists of large numbers. Below, we look at the actual goods moving between countries.

U.S. Exports

Overall, exports increased by 18% year-over-year. Here’s a look at some of the biggest recorded export items in 2022, alongside the dollar values:

  • Crude oil: $47.5 billion
  • Natural gas: $22.9 billion
  • Civilian aircraft engines: $7.2 billion
  • Soybeans: $7.0 billion

This list largest exports includes both commodities as well as items higher up on the economic complexity ladder, like airplane engines.

Foreign Imports

Imports increased by 15% last year. Interestingly, one of the top imports was crude oil—also one of the country’s top exports—equalling $65.1 billion. Here’s a look at the other big import items:

  • Telecommunications equipment: $12.6 billion
  • Pharmaceutical preparations: $18.8 billion
  • Cell phones and other household goods: $11.0 billion
  • Passenger cars: $19.0 billion

America’s largest imports tend to be vehicles and electronics. Non-tech goods like pharmaceuticals and furniture also rank high on the list.

The Trade Deficit Over Time

The U.S. has been at a deficit for over 40 years, so the current trend is no surprise.

While total trade (this time including both goods and services) dipped during the pandemic, the graph below reveals that trade figures are now higher than pre-pandemic levels and the overall deficit continues to increase.

us trade deficit over time

Despite the trade deficit and a drop in manufacturing employment over time, U.S. industrial production has been increasing over the long term.

Notably, there have been some recent efforts to onshore manufacturing in a few key sectors.

For example, the U.S. government has stressed the importance of American-made semiconductor chips, after pandemic delays in Taiwan put major strain on a wide range of industries. The government introduced the CHIPS Act, which will help set up two semiconductor chip manufacturing hubs by 2030, among other things.

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Markets

What History Reveals About Interest Rate Cuts

How have previous cycles of interest rate cuts in the U.S. impacted the economy and financial markets?

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Line chart showing the depth and duration of previous cycles of interest rate cuts.

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The following content is sponsored by New York Life Investments

What History Reveals About Interest Rate Cuts

The Federal Reserve has overseen seven cycles of interest rate cuts, averaging 26 months and 6.35 percentage points (ppts) each.

We’ve partnered with New York Life Investments to examine the impact of interest rate cut cycles on the economy and on the performance of financial assets in the U.S. to help keep investors informed. 

A Brief History of Interest Rate Cuts

Interest rates are a powerful tool that the central bank can use to spur economic activity. 

Typically, when the economy experiences a slowdown or a recession, the Federal Reserve will respond by cutting interest rates. As a result, each of the previous seven rate cut cycles—shown in the table below—occurred during or around U.S. recessions, according to data from the Federal Reserve. 

Interest Rate Cut CycleMagnitude (ppts)
July 2019–April 2020-2.4
July 2007–December 2008-5.1
November 2000–July 2003-5.5
May 1989–December 1992-6.9
August 1984–October 1986-5.8
July 1981–February 1983-10.5
July 1974–January 1977-8.3
Average-6.4

Source: Federal Reserve 07/03/2024

Understanding past economic and financial impacts of interest rate cuts can help investors prepare for future monetary policy changes.

The Economic Response: Inflation

During past cycles, data from the Federal Reserve, shows that, on average, the inflation rate continued to decline throughout (-3.4 percentage points), largely due to the lagged effects of a slower economy that normally precedes interest rate declines. 

CycleStart to end change (ppts)End to one year later (ppts)
July 2019–April 2020-1.5+3.8
July 2007–December 2008-2.3+2.6
November 2000–July 2003-1.3+0.9
May 1989–December 1992-2.5-0.2
August 1984–October 1986-2.8+3.1
July 1981–February 1983-7.3+1.1
July 1974–January 1977-6.3+1.6
Average-3.4+1.9

Source: Federal Reserve 07/03/2024. Based on the effective federal funds rate. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992, 1984-1986, 1981-1983, 1974-1977).

However, inflation played catch-up and rose by +1.9 percentage points one year after the final rate cut. With lower interest rates, consumers were incentivized to spend more and save less, which led to an uptick in the price of goods and services in six of the past seven cycles. 

The Economic Response: Real Consumer Spending Growth

Real consumer spending growth, as measured by the Bureau of Economic Analysis, typically reacted to rate cuts more quickly. 

On average, consumption growth rose slightly during the rate cut periods (+0.3 percentage points) and that increase accelerated one year later (+1.7 percentage points). 

CycleStart to end (ppts)End to one year later (ppts)
July 2019–April 2020-9.6+15.3
July 2007–December 2008-4.6+3.1
November 2000–July 2003+0.8-2.5
May 1989–December 1992+3.0-1.3
August 1984–October 1986+1.6-2.7
July 1981–February 1983+7.2-0.7
July 1974–January 1977+3.9+0.9
Average+0.3+1.7

Source: BEA 07/03/2024. Quarterly data. Consumer spending growth is based on the percent change from the preceding quarter in real personal consumption expenditures, seasonally adjusted at annual rates. Percent changes at annual rates were then used to calculate the change in growth over rate cut cycles. Data from the last full quarter before the date in question was used for calculations. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992, 1984-1986, 1981-1983, 1974-1977).

The COVID-19 pandemic and the Global Financial Crisis were outliers. Spending continued to fall during the rate cut cycles but picked up one year later.

The Investment Response: Stocks, Bonds, and Real Estate

Historically, the trend in financial asset performance differed between stocks, bonds, and real estate both during and after interest rate declines.

Stocks and real estate posted negative returns during the cutting phases, with stocks taking the bigger hit. Conversely, bonds, a traditional safe haven, gained ground. 

AssetDuring (%)1 Quarter After (%)2 Quarters After (%)4 Quarters After (%)
Stocks-6.0+18.2+19.4+23.9
Bonds+6.3+15.3+15.1+10.9
Real Estate-4.8+25.5+15.6+25.5

Source: Yahoo Finance, Federal Reserve, NAREIT 09/04/2024. The S&P 500 total return index was used to track performance of stocks. The ICE Corporate Bonds total return index was used to track the performance of bonds. The NAREIT All Equity REITs total return index was used to track the performance of real estate. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992). It is not possible to invest directly in an index. Past performance is not indicative of future results. Index definitions can be found at the end of this piece.

However, in the quarters preceding the last rate cut, all three assets increased in value. One year later, real estate had the highest average performance, followed closely by stocks, with bonds coming in third.

What’s Next for Interest Rates

In March 2024, the Federal Reserve released its Summary of Economic Projections outlining its expectation that U.S. interest rates will fall steadily in 2024 and beyond.

YearRange (%)Median (%)
Current5.25-5.505.375
20244.50-4.754.625
20253.75-4.03.875
20263.00-3.253.125
Longer run2.50-2.752.625

Source: Federal Reserve 20/03/2024

Though the timing of interest rate cuts is uncertain, being armed with the knowledge of their impact on the economy and financial markets can provide valuable insight to investors. 

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