The United States of America (USA) is one of the biggest economies and trading nations in the world. In 2017 its exports of goods and services totalled $2.35 trillion and about 60% of funds used in international trade are US dollars. Only major economies such as China and the European Union (EU) can rival its influence.
But what is it that makes the US tick? And what is the outlook for SMEs looking to trade with one of the world’s major powers?
We thought we’d break it down, because we know that before you trade with a country, having a strong picture of the market is important – you need to know that there’s a desire for your product and that there are viable partners for you to work with; or that regulations won’t get in your way.
Imports vs exports
The US has a highly diversified economy with a world-leading industrial sector. This is reflected in its main exports, which include aircrafts, fuel, cars and vehicle parts. Although it’s not all machinery – pharmaceuticals and even soybeans rank in its top 10 exports!
Interestingly, however, the US currently imports more than it exports. In 2017, total imports were $2.90 trillion, while exports were $2.35 trillion. Electronic equipment (like computers) currently stands as its main import – totalling over $386bn! – closely followed by machinery & engines ($367bn) and vehicles ($306bn).
Partners in trade
The US’ largest trading partner is the European Union, which accounted for $717bn in total trade in 2017. This is closely followed by China ($635bn) which is by far the largest single-nation trading partner.
Interestingly, two of the US’ strongest commercial partners sit at its borders – Canada and Mexico. They account for over $1 trillion in total trade between them!
Emerging major markets such as India and Brazil are also pushing their way up the list – and will no doubt continue to become close partners with the US in the future.
Tariffs and regulation
Tariffs are the taxes on imports and exports between different countries, and for the US, they are a core factor in government policy; which means they can change with administrations.
The energy sector, as an example, is currently tariffed higher than most sectors – though on the whole, US tariffs are not unusually high by world standards. It’s important to keep an eye on changing tariff announcements to understand how they might affect you.
In terms of regulation, the US Customs and Border Protection (CBP) Service and a number of government agencies regulate goods imported to the country. As you might expect, regulations are tougher on things like chemicals and animal products. You can get a fuller picture of this on the CBP website.
If you are importing cargo via ocean vessel, you are required to complete an Importer Security Filing – this is certain advance cargo information that must be submitted electronically to CBP before arrival. Failure to comply can result in penalties, increased inspections and delay of cargo.
The picture for SMEs
Small and medium enterprises (SMEs) are the backbone of the US economy, accounting for 30 million of its companies and it takes special care to accommodate those SMEs who might be new to trading – including tips for new importers and exporters.
For example, the CBP does not require an importer/exporter to have a licence or permit; however other government agencies may require one depending on what you’re importing – like alcohol or medicine.
Prior to importing or exporting, you also have the option to contact a CBP office at your chosen port of entry or exit. They have specialists for various commodities and can help you with information on specific requirements, possible duty rates and more.
The United States offers a world of opportunity for SMEs. If you’re looking to trade to or from the US – then get in touch with our team today to see how Twill could help you! – www.twill.net.