Known worldwide as the land of capitalism, the USA is at the top of the ladder when it comes to trading internationally. For the past century, the USA has been the world’s number one economy and a force for global leadership.
With over $7 trillion in exports and imports in goods and services traded in 2022, the USA continues to claim its place as the 2nd largest trading country in the world, just behind China.
The USA has trading relations with over 200 countries and territories in all corners of the globe. Their current top trading partners are Canada, Mexico, Japan, China, Germany, the UK, and the European Community (cumulative of the 27 member states). Their international relations and partnerships reflect on the influence the US dollar still underpins in the global economy, supporting international commodity trades and stock markets. Dozens of currencies around the globe remain pegged to the dollar for exchange rate stability.
The United States is the largest importer and 2nd largest exporter of goods in the world, just behind China. In 2022 alone, the USA exported $2.1 trillion and imported $43.2 trillion in goods, which represents a 17.5% and 14.6% increase over their 2021 exports and imports respectively.
As for the services sector, the statistics show similar results, the United States is the largest services exporter and importer in the world. Their 2022 service exports totalled $926 billion and their imports $680 billion, an increase of 16.4% and 23.7% increase respectively compared to their 2021 results. Their main services trading partners however were different, with Ireland being their largest importer of services and the UK their largest services provider.
The American market at glance
Spread over 50 states and 4 different time zones, the USA has an estimated population of 333.3 million.
The USA’s GDP is projected to grow at 1.0% in 2024 (OECD estimates) but its growth in private consumption and investment is expected to moderate, this in response to the tightening in monetary and financial conditions. Still, the USA remains the largest and most technologically powerful economy in the world, with a GDP per capita of around $76,343 (IMF, 2022).
The USA is a leading industrial power in the world, highly diversified and technologically advanced; its main industries being petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, timber, and mining.
Their main exported commodities are agricultural goods, industrial supplies, capital goods (including transistors, aircraft, motor vehicle parts, computers, and telecommunications equipment) and consumer goods (including motor vehicles and medicines).
America has one of the finest and most efficient transport networks in the world. It has approximately 6,586,610km of highways and a railway that has mainline routes covering 293,564km. It also has 13,513 airports, of which 5,054 have paved runways, and 6,092 heliports.
Their main ports spread all over their west and east coast, facilitating the movement of goods across their territory. Their 10 principal ports are Baltimore, Boston, Charleston, Jacksonville, New York, Norfolk, Philadelphia, Port Everglades, Savannah, Wilmington.
A key ally and trade partner to the UK
British brands, known for their high quality and usually perceived as upmarket, are highly valued in the USA market. There are ample opportunities for SMEs and exporters to explore this ever growing and welcoming market.
The USA is an attractive market for consumer products, usually due to its large, affluent, diverse, and age-broad demographic, its stable economy and well-established infrastructure.
With similar consumers’ interests, cultural similarities, minimal language barriers, but more importantly, with and easy access to the global supply chain, it’s not surprising that the USA is the UK’s largest export market for goods and services.
In 2022 alone, the USA’s goods and services trade with the United Kingdom totalled an estimated $295.6 billion. Exports were $158.2 billion, and imports were $137.4 billion.
According to data from the ONS, the UK exports to the USA equalled £193.1 billion by Q3 of 2023, which represents 21.9% of the total UK exports.
Top 5 UK products exported to the USA:
Top 5 UK services exported to the USA:
The above graphics are taken from Department for Business and Trade.
The USA market holds high potential in higher value, differentiated, niche sectors, such as technology and life sciences, but also in the food and drink industry, where the USA is already the UK’s second largest export market.
Market challenges
As welcoming as the USA market can be, it can also present challenges to overcome for SMEs looking to establish in this territory.
The US is a federal system, which means it doesn’t operate as a single national market but as 50 individual different ones. Traders will need to treat each state as a separate entity, each with its own local procedures and regulations.
Legal compliance around packaging, ingredients and safety can be expensive and force UK traders to re-design their products to adapt them to suit the American requirements, especially for the food and drugs sectors, where particularly strict rules are set for imported food, cosmetics, vaccines and pharmaceutical products. All these federal and single state regulations can be difficult to navigate and add extra costs, time and complexity to trade operations, which can negatively deter SMEs looking to enter the American market.
Logistical difficulties and potential manufacturing constraints must be taken into consideration as well; serving a market with customers spread across four different time zones, which reflect on the geographical size of the country alone, can add up to an already intricate trading journey.
Reflecting on these complexities, the UK and USA governments continue to discuss and explore the potential launch of a Trade Agreement that would remove barriers to trading in services and goods, and boost collaboration, innovation and growth. Whilst those negotiations continue and until a final agreement comes to light, businesses interested in expanding their reach to the USA will have to continue looking for alternatives and options available to facilitate their trade and help them establish overseas successfully and compliantly.
Understanding the market, the legal requirements and all potential risks is essential, especially for inexperienced exporters. For these businesses, looking into expanding to other smaller and perhaps closer markets, such as Germany and the Netherlands might be more profitable in the short and medium term, this could also help them gain the experience and financial strength required to successfully expand to the largest economy in the world, the USA.
Bespoke market research
The London Chamber, through its Business Information Services, available to Premier Plus Members, can help companies access specialised overseas market information. Our reports include:
- Overview of the country’s economy
- In-demand products and services from the UK
- Information on export and import procedures
- What to expect when doing business in the country
- UK and worldwide import and export data
Sources
This country snapshot was prepared with information compiled from: the Office of the United States Trade Representative, Croner-i, Department for Business and Trade, Trading Economics and the Office for National Statistics (Trade in goods, Trade in services).
Produced by Elizabeth Skewes, Trade Services and Business Development Manager, LCCI.
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