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 2019, California exported to 229 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.
2019 Trade Statistics are available
Global Trade Facts
The projected world population as of 2020 is 7.8 billion people. During January 2019, 4.3 births and 1.9 deaths are expected worldwide every second. (U.S. Census Bureau, February 2019)
The WTO in their 2020 World Trade Report, took into account the coronavirus global pandemic which has caused unprecedented international uncertainty. Global trade experienced its worst downturn since the 1930s with a forecast that trade will have tumbled by 13% to 32% in 2020 compared to the previous year.
The report underscored the importance of international cooperation during this time to keep markets open for goods and services, as well as to safeguard public health and revive economic activity around the world. In the spring of 2020, Director General Roberto Azevêdo announced that he will be stepping down in August to allow a new Director General to be chosen before the 12th ministerial conference in 2021. Along with this change, the WTO is also undergoing discussions of reform with the goal amid the pandemic that the WTO will be able equipped to contribute to the economic recovery of all of its members.
As of August 2020, the WTO’s goods barometer has confirmed the steep drop in trade, but shown signs of a nascent recovery. The barometer is consistent with the WTO estimate that predicted a 18.5% decline in merchandise trade in the second quarter of 2020, compared to 2019.
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 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 2019, combined goods and services imports topped $3.1 trillion and services by itself reached $597.5 billion. In 2018, this was composed of: 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 2019, combined goods and services exports were almost $2.5 trillion. Exports of services alone hit a record $846.7 billion. The United States also had record exports to several countries including 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.
A 2020 study from the Business Roundtable reported that more than 40 million, or 1-in-5, jobs in the U.S. stem from international trade practices. The number of U.S. jobs that depend on international trade has more than doubled since NAFTA’s inception in 1992, reaching 20% in 2018.
The largest export markets for U.S. goods in 2019 were Canada ($292.3 billion, a 2.5% decrease), Mexico ($256 billion, an 3.5% decrease), China ($106.6 billion, a 11.3% decrease), Japan ($74.65, a 0.8% decrease), and the United Kingdom ($69.15, a 4.2% 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 2019, the trade deficit decreased from $627.7 billion in 2018 to $616.8 billion. Exports of goods and services decreased $1.5 billion, or 0.1 percent, in 2019 to $2,499.8 billion. Exports of goods decreased $21.3 billion and exports of services increased $19.7 billion. Imports of goods and services decreased $12.5 billion, or 0.4 percent, in 2019 to $3,116.5 billion. Imports of goods decreased $42.6 billion and imports of services increased $30.2 billion. (BEA)
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 2019, California exports amounted to $173.3 billion. This is an decrease from the 2018 total of $178.4 billion. California maintained its perennial position as a top exporting state and as the number one state in two-way trade.
In 2019, exports to FTA markets accounted for almost 40% of California exports. Since 2007, exports from California to FTA markets have grown by over 25%. California exports to FTA partners totaled $68.44 billion in 2019. (ITA)
Exports from California accounted for 10.5% of total U.S. exports in 2019. 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 largest in terms of employment by newly acquired, established, or expanded foreign-owned businesses in 2018, employing a total of 102,000 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 23.2 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 totaled $27.8 billion in 2019, down from $30.7 billion in 2018. Mexico purchases 16% of all California exports.
California’s exports to Mexico are driven by computers and electronic products, which account for 21.1% 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 9.6% of all California exports. In 2019, California exported more than $16.6 billion to Canada.
Computers and electronic products remained California’s largest exports, accounting for 28.6% of all California exports to Canada.
California is the second largest exporting state to Asia, after Texas. In 2019, California exported $115.229 billion in goods to the region.
California exports to Mainland China totaled $15.85 billion in 2019. Computers and electronic products accounted for 23.5% of exports to China.
Exports to Hong Kong were $8.4 billion in 2019, a decrease from $9.9 billion in 2018, losing the spot as California’s No. 5 export destination to South Korea.
California exports to Japan totaled $11.8 billion in 2019. Computers and electronic products accounted for 18.8% of total exports.
South Korea overtook the spot of California’s No. 5 trading partner as California exported $9.16 billion to South Korea in 2019. Over 20% was made up of non-electrical machinery.
California exports to the European Union (27) totaled $34.962 billion in 2019. California is the top exporting state to Europe.
Transportation equipment, computers and electronic products, chemicals, and miscellaneous manufactured commodities are California’s leading export sectors to the region. European Union countries purchase about 20% of all California exports.
Export Totals from California
World Economic Outlook: A Long and Difficult Ascent
International Monetary Fund, October 2020
Trade and American Jobs: The Impact of Trade on U.S. and State-Level Employment: 2020 Update
Business Roundtable, October 2020
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 2019 Editions
- California Agriculture Export Data – CDFA & UC Davis
- 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