Trade with America: are we getting a good deal?

“We have actually a trade surplus at the moment with America, although it’s a fairly modest sum of money involved. Whereas obviously we have something in the region of 65 to 70 billion trade deficit on an annual basis with the EU.”

BBC Question Time audience member, 30 November 2017

Our trade surplus with the USA was about £34 billion in the year to June 2017, using figures from the Office for National Statistics. We had a trade deficit with the EU of around £80 billion in the same time period.

Trade with the USA

The UK had a trade surplus with the USA of around £34 billion in the year to June 2017, so we export more to them than we import. In terms of services, the UK had a surplus of over £23 billion, and in terms of goods we had a surplus of over £10 billion in that time.

The USA accounted for 18% of UK exports in that period, and 11% of our imports came from the USA.

Trade with the EU

The UK ran a trade deficit with the EU of around £80 billion in year to June 2017, so we export less than we import. In 2015, the trade deficit was about £66 billion—which might be what the audience member was referring to.

This is primarily driven by goods—the UK  had a trade deficit of just under £97 billion with the EU during that time. In terms of services, we had a surplus of £17 billion.

EU member states accounted for 43% of UK exports and 54% of imports.You can read more about the UK’s trade with the EU here.

These figures aren’t perfect

Although they are produced by the government, we should not treat the numbers presented here as exact. This is because of something called “trade asymmetries”.

Each country records its imports and exports separately. Trade asymmetries occur when two partner countries record the same transaction as being of different values. So, say the UK sells the USA 500 bottles of whisky, the UK may record it as worth $50,000, whereas the USA records it as $49,000.

This can be for a variety of reasons including differences in the way values are converted, the timing of the transaction being recorded and methodological differences. Trade relations are complex—using a range of changing technologies and with supply chains crossing multiple borders— so it’s hard to measure these relations exactly.

These can lead to quite dramatic differences. In 2014 the UK recorded that it had a services trade surplus of $44.8 billion with the USA. However, the USA thinks that should be a deficit of $13.3 billion. That’s a difference of $58.1 billion.

All countries have trade asymmetries, and the UK’s are similar to other countries’, according to an analysis by Eurostat.