California is one of the 10 largest economies in the world with a gross state product of $3 trillion. International trade and investment are major parts of our economic engine that broadly benefit businesses, communities, consumers and state government. California’s economy is diverse, and the state’s prosperity is tied to exports and imports of both goods and services by California-based companies, to exports and imports through California’s transportation gateways, and to movement of human and capital resources.
Although trade is a nationally determined policy issue, its impact on California is immense. In 2018, California exported to 230 foreign markets. Trade offers the opportunity to expand the role of California’s exports. In its broadest terms, trade can literally feed the world and raise the living standards of those around us.
2018 Trade Statistics are available
Global Trade Facts
The projected world population on Jan. 1, 2018, is 7,444,443,881, an increase of 78,521,283, or 1.07 percent, from New Year’s Day 2017. During January 2018, 4.3 births and 1.8 deaths are expected worldwide every second. (U.S. Census Bureau, December 28, 2017)
The WTO in their 2019 World Trade Report, sees an increasing role for services trade and a need for global cooperation.
The report underlines that trade in services — ranging from distribution to financial services — can help countries boost economic growth, enhance domestic firms’ competitiveness and promote inclusiveness. Trade in services has expanded faster than trade in goods between 2005 and 2017, at 5.4 per cent per year on average According to the WTO Global Trade Model, a new quantitative trade model used by the WTO to make projections about global trade, the share of services in global trade could increase by 50 per cent by 2040. This is thanks to lower trade costs and the reduced need for face-to-face interaction due to digitalization. It is also dependent on policy barriers to services trade being lowered.
Despite the reforms that most economies have undertaken over the past few decades, trade in
services remains subject to higher barriers than trade in goods. Driving new services trade reforms via trade agreements has proven difficult. Accompanying market-opening negotiations with greater international cooperation focused on
domestic regulatory measures may be one way to harness the potential of services trade.
In their 2018 Report, Reinvigorating Trade and Inclusive Growth, the WTO forecast that world trade growth is likely to be slower than originally thought in 2018 and 2019, noting the direct economic effects of a trade war that has blown up this year have been modest so far. The WTO forecasted that world trade in goods would grow by 3.9% this year, which is less than the 4.4% that was forecast in April. In 2019, trade is expected to grow by 3.7%, which is lower than the previously forecasted 4.0%. The WTO says the downgrade reflects the heightened tensions being seen currently between major trading partners.
The WTO states that despite a recent rebound in trade, a prolonged slowdown in the pace of trade reform is leaving behind widespread trade distortions and putting at risk the strength and durability of the global economic recovery.
WTO economists find that trade reform has not sufficiently kept pace with the changing landscape of services trade, digital technologies, and foreign direct investment and that much also remains to be done in areas such as market access for goods and regulatory cooperation. Greater openness in such areas, the report claims, would promote competition, lift productivity, and raise living standards. In many other domains, such as the rural economy, gender and smaller enterprises, trade-related reforms are important to foster more inclusive growth and increase productivity. The report also notes that the current trade tensions may in part be rooted in issues that have been left unresolved on the negotiating table for too long. Cooperative action to secure greater, more durable openness could help to resolve these issues.
In 2017, world merchandise trade recorded its strongest growth in six years. Significantly, the ratio of trade growth to GDP growth returned to its historic average of 1.5, far above the 1.0 ratio recorded in the years following the 2008 financial crisis. 98 per cent of world merchandise trade took place under WTO rules last year.
U.S. Trade Facts
In 2018, combined goods and services imports topped $3.1 trillion and services by itself reached $557.9 billion: food, feeds, and beverages ($147.4 billion); capital goods ($693.3 billion); automotive vehicles, parts, and engines ($372.3 billion); and consumer goods ($647.9 billion). The U.S. also had record imports from several countries, led by China ($539.5 billion) and Mexico ($346.5 billion).
In 2018, combined goods and services exports were almost $2.5 trillion. They also increased 6% from 2017. Exports of services alone hit a record $828.1 billion. The United States also had record exports to several countries including Mexico ($265 billion) and the United Kingdom ($66.2 billion).
According to the World Bank, the United States is the world’s largest economy with a GDP of $17.9 trillion. The population of the U.S. is expected to reach 326,971,407 on Jan. 1, 2018. This represents an increase of 2,314,238, or 0.71 percent, from New Year’s Day 2017. Since Census Day (April 1) 2010, the population has grown by 18,225,587, or 5.90 percent. (U.S. Census Bureau, December 28, 2017)
For every $1 appropriated to U.S. Commercial Service in Fiscal Year 2016, an estimated $192 was returned to the American economy in the form of increased exports ($56.2 billion) and foreign direct investment ($5.3 billion), which supported approximately 300,000 U.S. jobs.
From 2010 to 2016, U.S. Commercial Service assistance played a significant role in helping U.S. companies and localities achieve over $300 billion in U.S. exports and over $23 billion in foreign direct investment – supporting an estimated 1.7 million American jobs.
The largest export markets for U.S. goods in 2018 were Canada ($298.7 billion, a 5.6% increase), Mexico ($265 billion, an 8.5% increase), China ($120.3 billion, a 7.5% decrease), Japan ($74.96, a 10.3% increase), and the United Kingdom ($66.23, a 16.2% increase).
For the first six months of 2019, amid trade tensions with China causing imports from China to decrease by 12 percent and exports to China to decrease by 19 percent, Mexico supplanted China as the top trading partner of the U.S. (Freight Waves, August, 2019)
In the U.S. in 2018, expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $296.4 billion, an increase of 8.7 percent from 2017. By industry the most expenditures were manufacturing and totaled $199.7 billion, accounting for almost 40% of the total, $34 billion of which was in the food manufacturing sector. There were also large expenditures in real estate, rental, and leasing ($22.1 billion) and information ($16.3 billion). By country of ultimate beneficial owner, top investing countries were Germany and Ireland, but their values were suppressed due to confidentiality requirements, leaving the largest investing countries into the U.S. as Canada ($32.5 billion), followed by the Switzerland ($22.4 billion), and France ($19.9 billion); with Europe contributing nearly 75% of the new investment in 2018. California received one of the top expenditures by state totaling $27.3 billion. (Bureau of Economic Analysis)
Statistics released in November 2019 showed that majority owned U.S. affiliates (MOUSAs) of foreign multinational enterprises employed 7.4 million workers in the U.S. in 2017, which is a 2.8% increase from 2016. Majority owned U.S. affiliates accounted for 5.8% of total private-industry employment in the U.S. Employment by MOUSAs was largest in the manufacturing and retail trade sectors. MOUSAs with ultimate beneficial owners in the UNited Kingdom, Japan, and Germany were the largest contributors to total MOUSA employment. (Bureau of Economic Analysis)
Annual Summary for 2019
Source: Bureau of Economic Analysis – http://www.bea.gov/newsreleases/international/trade/tradnewsrelease.htm
California Trade Facts
The U.S. Department of Commerce reported that, in 2018, California exports amounted to $178.4 billion. This is an increase from the 2017 total of $172 billion. California maintained its perennial position as a top exporting state and as the number one state in two-way trade.
In 2018, exports to FTA markets accounted for just over 40% of California exports. Since 2007, exports from California to FTA markets have grown by over 25%. California exports to FTA partners totaled $73.46 billion in 2018. (ITA)
Exports from California accounted for 10.7% of total U.S. exports in 2018. California exports translate into high-paying jobs for more than 1 million Californians. International trade, including exports and imports, supports nearly 5 million California jobs – nearing 1 in 4 jobs.
In 2016, new foreign direct investment into California totaled $64.705 billion. In 2017, the largest foreign direct investment expenditures were in California, totaling $41.6 billion. California was also the third largest in terms of employment by newly acquired, established, or expanded foreign-owned businesses, employing a total of 55,700 people. (Bureau of Economic Analysis) However, California was the largest in terms of jobs directly supported by majority foreign-owned affiliates totaling $802,800 jobs. The top industry sectors for FDI into California were textiles, financial services, communications, business services, and software and IT services. The top sources of FDI into California are the United Kingdom, Germany, Japan, France, and Canada. (Select USA)
Top Export Sectors
California is a top exporter in the nation of computers, electronic products, transportation equipment, machinery except electrical, and miscellaneous manufactured commodities. Computers and electronic products are California’s top export, accounting for 25.3 percent of all the state’s exports.
According to a study by the Consumer Technology Association, in 2017 California had over three million jobs directly and indirectly attributable to consumer tech, many of which derive from consumer tech exports.
Other top categories included chemicals, agricultural products, food manufactures, and electrical equipment.
Mexico continues to be California’s No. 1 export market. California exports to Mexico increased to $30.7 billion in 2018, up from $26.7 billion in 2017. Mexico purchases 17% of all California exports.
California’s exports to Mexico are driven by computers and electronic products, which account for 25.8% of all California exports to Mexico. Other top categories included transportation equipment, non-electrical machinery, and electrical equipment, appliances and components.
Canada is California’s second largest export market, purchasing 9.9% of all California exports. In 2018, California exported more than $17.75 billion to Canada.
Computers and electronic products remained California’s largest exports, accounting for 32.5% of all California exports to Canada.
California is the largest exporting state to Asia. In 2018, California exported $122.706 billion in goods to the region.
California exports to Mainland China totaled $16.345 billion in 2018. Computers and electronic products accounted for 25.6% of exports to China.
Exports to Hong Kong were $9.905 billion in 2018, a decrease from $12.1 billion in 2017, losing the spot as California’s No. 5 export destination to South Korea.
California exports to Japan totaled $13.1 billion in 2018. Computers and electronic products accounted for 17.7% of total exports.
South Korea overtook the spot of California’s No. 5 trading partner as California exported $9.942 billion to South Korea in 2018. Almost 30% was made up of non-electrical machinery.
California exports to the European Union (28) totaled $31.84 billion in 2018. California is the top exporting state to Europe.
Computers, electronic products, transportation equipment, chemicals, and miscellaneous manufactured commodities are California’s leading export sectors to the region. European Union countries purchase 17.8% of all California exports.
Export Totals from California
Preliminary Overview of the Economies of Latin America and the Caribbean
ECLAC, December 2019
Cato Institute Project on Jones Act Reform
Regulation: The Man Behind Trump’s Tariffs
CATO Institute, Fall 2018
Is Globalization an Engine of Economic Development?
Our World Data, August 1, 2017
Trade Policy Review: United States of America
WTO, December 2018
How California’s Economy Benefits from International Trade and Investment
U.S. Services Exports: California
Coalition of Services Industries, February 2015
WTO Trade Statistics 2018 Editions
- California Dept of Finance – California Trade Data
- California Travel & Tourism Commission – International Travel Reports
- California Tourism Facts and Figures
- International Trade Administration – International Tourism and Travel
- Organization for International Investment
- Trade and American Competitiveness Coalition Statistics
- Trade Partnership Worldwide
- U.S. Bureau of Transportation Statistics
- U.S. Census Bureau Foreign Trade Statistics
- U.S. Department of Commerce – California Trade Stats
- US Department of Commerce -Small and Medium-Sized Exports by Market
- U.S. Department of Commerce – TradeStatsExpress
- U.S. Department of Commerce – U.S. Census Bureau Trade in Goods and Services (pdf)
- U.S. Department of Commerce – Trade and Economic Analysis
- U.S. Waterborne Import-Export Trade Data
- Wiser – Foreign Trade Database
- World Trade Organization – Country Trade Profiles