Every year, the 28 countries of the European Union (EU) suck in 100’s of billions of dollars worth of goods and services from the USA. In 2014, that figure is expected to exceed $0.5 Tn. The EU and the USA remain each other’s largest import/export partners (>$1 Tn annual flow). In this article we are going to drill down into the import of goods (so excluding services, which will be dealt with next month) by the EU from the USA. Firstly, we will ask what are these goods that are so consistently imported (making the EU the #1 market, after Canada, for US exported goods) and secondly which EU countries are doing all that heavy importing…
>$262 Bn worth of manufactured goods and primary products...
Manufactured goods are the main deal worth $205 Bn (78%), dominated by Machinery and transport equipment at $100 Bn (38%), followed by Chemicals (including Pharmaceuticals) at $58 Bn (22%). Depending upon one's view of the impending Transatlantic Trade & Investment Partnership (reduced tariff and regulations) as well as the declining US energy costs (the EU has, relative to the USA, high labor and energy costs), more of these imports can be expected and will redress the EU/US trade imbalance.
Primary products account for just over $50 Bn, (19%) of EU imports, split between Fuels and mining products at $33 Bn (13%), Agriculture at $17 Bn (6%), and finally Non-ferrous metals at $3 Bn. The interesting one to watch is Fuels as the EU starts to import liquefied natural gas from the USA. Europe's energy costs are 2 or 3x higher than those in the USA, having made the wrong energy bet (taxing fossil fuels to cross subsidize renewables…). Unmatchable (in low price and huge scale) shale gas is coming on stream in the USA, and the EU needs cheaper and more secure energy. Imports of US agriculture continue to decline, the EU was once the top market for US agricultural exporters, now it is #5!
Bound for Germany, the UK and...
There are two clear top importers: Germany and the UK, each importing $47 Bn (18%) worth of US goods, totaling $94 Bn (36%) when combined.
Learn more about the #1 EU destinations of US goods!
Add in the #3 market, the Netherlands with $43 Bn (16%) and you have a total of $137 Bn, so >52% of EU imports from the USA. In many ways, the placing of Germany is obvious as the EU’s biggest market, in terms of GDP and population. But there are two surprises: 1) that the UK should be on a par with Germany is a testament to the open UK economy as well as being the famous or infamous (depending upon which side of the globalized trade market fence you sit) “aircraft” carrier for the EU and 2) the Netherlands, which punches far above its economic and demographic weight. With great trading nous and by exploiting historical trading relations, their central geographic positioning, excellent infrastructure including sea/airports, multi-modal hubs, 3rd Party Logistics (3PL), the Dutch import from the USA and then re-export to the rest of Europe. I say "bravogeroep".
Next comes Belgium, $32 Bn (12%), sharing some of these “Dutch” traits. Then we have France at $32 Bn (12%) which given its economy and population, both #2 in the EU, is lower than expected. This reflects France's own manufacturing prowess, a sense of nationalism as well as Fuel (think nuclear) and Agricultural (remember French food and wine...) autonomy. These relative national import balances are expected to continue as EU imports from the USA grow, but again Fuel/Energy could be the game changer.
