If you’re riding the Acela from Washington, D.C. to New York, you’ll see a billboard spanning the Delaware River into New Jersey that reads: “Trenton makes, the world takes.”
The sign is old, but the message is still fresh. And it’s true across the country.
While some may say that the days of American global dominance in manufacturing are gone forever, the truth is that the United States has been and remains strong as a leading exporter of both goods and services
How much does America export and how does it compare to other countries?
2014 was a record year for U.S. exports, which totaled $2.35 trillion – or 13.5 percent of America’s total economic output (gross domestic product). 2014 was also the fifth year in a row that American exports hit record highs. In addition, America reached record export levels with 52 of its trading partners in 2014, including with Canada, Mexico, and even China.
Globally, America ranks first in the world in services exports (non-tangibles such as legal and financial services), and second in goods exports. By comparison, China ranks top in goods, but fifth in services; Japan ranks fourth in goods and eighth in services; and Germany ranks third in both categories. U.S. exports accounted for around ten percent of all global exports.
How many U.S. jobs do U.S. exports support?
According to the Office of the U.S. Trade Representative (USTR), U.S. exports supported more than 11 million American jobs in 2013. In other words, every one billion dollars’ worth of exports supported approximately 5,600 jobs. Export-supported jobs made up around eight percent of the 136 million U.S. jobs in the 2013 economy.
What does America export?
The largest service export last year was travel, which totaled $177 billion. (Every dollar spent by a foreign student or tourist in this country counts as an export dollar.) The next largest categories of services exports were licensing fees for intellectual property owned by American companies (dubbed “Charges for the Use of Intellectual Property” in government data) and professional and technical services such as for research and development, consulting, legal services, and even market research (“Other Business Services”).
One interesting emerging story is the source of growth in the U.S. exports of goods. In 2014, the principal drivers of growth in American goods exports were crude oil, industrial machinery and cars. From 2013 to 2014, American crude oil exports increased by $7 billion – or 136 percent – while exports of cars (primarily to Canada, China, and Germany) grew by $61 billion.
What kinds of American companies export?
The short answer: all kinds of American companies export. Small, medium, large, and global, there is no company too large or too small to benefit from exports. Moreover, nearly 98% of American exporters are classified as “Small or Medium Enterprises” (SMEs), which means that only two percent of U.S. exporters are those large companies everyone knows and thinks about when talking about global trade. But while small and medium-sized firms account for around one third of the total value of exports, fewer than four percent of SMEs are exporting. This means there’s tremendous untapped potential for small and medium-sized U.S. companies to reach the rest of the world.
Who buys U.S. exports?
Many people may think of Asia or Europe when they think about America’s top trading partners, but the biggest buyers of U.S. goods are actually right next door. In 2014, Canada was responsible for almost twenty percent of all U.S. goods exports, $312 billion worth, followed by Mexico with around $240 billion in purchases of U.S. exports. Combined, our NAFTA partners bought almost 35 percent of all U.S. goods shipped out of the country last year. China came in third with nearly $125 billion in imported U.S. goods.
Canada was also the largest buyer of U.S. services exports, followed by the United Kingdom and Japan.
Why do trade agreements matter to U.S. exports?
There is always room for improvement when it comes to removing barriers and opening up markets for U.S. exports, which is why the United States enters Free Trade Agreements (FTAs) with its trading partners. A recent report by Third Way found that in 13 of the 17 countries with which the U.S. has an FTA, trade balances improved in the U.S.’s favor after the agreement was signed. Further, goods exports increased on average 52 percent annually, while imports increased by only 26 percent.
Currently, the United States is negotiating two major trade agreements – the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP) that together would encompass roughly two thirds of global trade. The success of these agreements could create even more opportunities for American companies and workers by lowering barriers to trade in Europe and in Asia.
The growth in U.S. exports over the past five years has played a significant role in the nation’s recovery from the recession. In fact, the U.S. Commerce Department reports that exports accounted for as much as one-third of economic growth since 2009. This means that policymakers should do what they can to ensure that exports remain a strong driver of economic growth. By continuing to open new markets for U.S. exports, America can strengthen its economy and help bring prosperity to millions of Americans and their families.
Matt Carew writes about international trade and economic policy. He is based in Washington, D.C.