US President Donald Trump is making global leaders sick to coincide with his tariff threat.
The announcement of tariffs in Canada and Mexico, followed by delays, then threatening the European Union by storming Chinese goods with an additional 10% tariff, is concerned about where the US president will go next.
Trump’s policy comes when the United States operates a major negative trade balance with the rest of the world. This happens when a country buys or imports more from other countries than it sells or exports.
In 2024, the US operated a trade deficit of more than $120 million (£97 billion) of goods in other parts of the world, but operated nearly $300 million in services.
The chart below shows why the Trump administration chose a particular country to target with tariffs and what the impact of trade barriers is.
The analysis primarily looks at trade in physical goods as opposed to services. Unlike commodity transactions, this is not subject to tariffs or border checks.
Which countries export the most products to the US?
In 2024, the US received the most imports from Mexico, China and Canada. These countries have exported more than $400 million in goods to the United States.
Mexico and Canada export not only energy and oil but many vehicles to the US. Mechanical and electrical equipment also exports most of Mexico’s exports to the United States. China’s exports include electronic equipment, machinery and agricultural products.
European and Asian allies such as Germany, Japan, South Korea and Vietnam are the US’s next largest exporters, and the US imported more than $100 million in goods from these countries last year. The US imported $68 billion in goods from the UK that year.
The EU is treated as one large entity for trade and tariff purposes, but the data contains individual figures from each member state.
The collective value of exports since 2009 is 5.2 tonnes in Canada, 5.3TN in Mexico and 7.2TN in China.
Trump is tackling a massive trade deficit
But trade works in both ways. The United States is the world’s largest importer of goods, while China is the largest exporter.
Overall, when it comes to tallying the total value of imports and exports, the US also has the world’s largest trade deficit, worth over $100 million. Some countries export to far more countries than they import, and these countries seem to be the most targeted by Trump.
According to data from the US International Trade Agency, the countries where the US has the biggest trade obstacles are China and Mexico.
The 2024 figures show that the US’s largest trade deficit was $296 million with China. For Mexico it was $172 billion. These countries were first to pose tariff threats.
The US’s next biggest deficit is in Vietnam – the gateway to the US for Chinese companies avoiding tariffs – followed by Ireland, Germany and Taiwan.
Which sectors could be most affected?
For Canada, it is one of three countries targeting Trump’s second term tariffs, so the most important products exported to the US are fossil fuels, cars, machinery, mainly jet turbines and piston engines. is. Additionally, automobiles and machinery represent the largest group of products transported to be sold from the US to Canada.
Mexico has a significant trade surplus with the United States, but the US still sends tens of millions of dollars worth of products to cars, mechanical and electrical products south of the border. This includes microchips, fiber cables and computer equipment. All of Mexico exports the same products to their north neighbours, but their main exports are cars and trucks.
Mexico and Canada have enjoyed most of the free trade with the United States since 1994, when the North American Free Trade Agreement (NAFTA) came into effect. It was replaced in 2020 by the US-Mexico-Canada Agreement (USMCA).
The US trades a significant amount of fossil fuels for both of its neighbors. Trump’s first announcement appears to have confirmed this when targeting energy resources coming to the United States due to a low 10% tariff rate.
Trump has threatened tariffs on the European Union, but has not yet announced them. Data shows that vaccines, machinery and automobiles make up almost half of the EU’s exports to the US. Other ways, oil, pharmaceutical items and machines flow from the US to the EU.
Finally, there is China, which is implementing retaliatory tariffs against the United States. Half of that is sent to the United States on computers, phones, batteries, and electrical devices such as toys and games. US exports to China include electrical items such as microchips, oils and soybeans.
Trade between the US and China is declining. In 2018, 21% of US imports came from China, and by 2023 this had fallen to 14%.
Which countries are most exposed?
Looking at the proportion of countries’ trade proportions by the US, we can sense how exposed the trade economies of each country are.
ComTrade data shows that the majority of both Canadian and Mexican products are sent to the US.
The EU, China and the UK are not directly exposed. 19%, 15% and 14% of exported products are sent to the US. Within the EU, Germany dominated the value of the bloc’s exports by over $160 billion in 2024, accounting for only 10% of the world’s total. Ireland, which exports about $100 billion to the US, is the highest, with more than a quarter of exports to the US market.
But even when the proportion of direct trade with the US is low, experts warn that global trade interconnectedness still means the country is on the shooting line. This is because modern supply chains spread across multiple countries, and parts often cross borders to create finished products. For example, if Germany suffered tariffs but the UK did not, then British companies could still be hit with the impact if they supply parts used in German products for the US market.
What does this mean for the UK?
At this point, the UK has been avoiding certain threats to tariffs. Some of this may depend on the fact that the UK has a relatively balanced trade relationship with the US compared to other countries.
One reason that UK exports to the US are outside of Trump’s fire is the surplus of physical goods trade with the UK, with US figures of around $10 billion (approximately £8 billion) in 2023 Because it suggests that. There was a surplus of £2.4 billion in small goods that year – there was a surplus of £71.4 billion in collective goods and services.
ONS blames this difference for two main reasons. Unlike the UK, territorial definitions with US data including crown dependencies. and the methodology used to estimate service transactions.
Bloomberg Economics estimates that if Trump imposes a 20% tariff on the UK, growth could be 0.4% this year instead of 1.1%.
Services account for the majority of trade between the UK and the US. However, according to data from the U.S. International Trade Agency, if a commodity is targeted by future tariffs, the UK’s most exported products are mechanical generators, automobiles and pharmaceuticals. The US’s biggest exports to the UK were oil, jewelry and aircraft products.
One complex factor for the Labour Government is that the closer the UK economy is to the EU, the fewer rooms are available to meet US demands for trade, as they promised to take place in the July election.
Experts say Washington is likely to demand access to the UK market for US agrifood products, including hormone-fed beef and chlorinated chicken. This is politically challenging for labor, but it removes the UK from its boundary line in line with EU food safety standards, making trade even more difficult. Therefore, experts warn that Keir Starmer will be forced to choose between Brussels and Washington.
Sources and Methodology
Most visual data for this work was sourced from the US Bureau of International Trade. Data not procured from them will be described as such. The product classification used is HS4. Categories sections such as Electrical Machinery and Machinery include a wide range of products, with only the top items specified within them. A complete list of products in each category is available here. Data on UK imports and exports differs from ONS data as categories and territorial definitions are used.
