Description
How will the British exit from the European Union affect US-UK trade and investment? Here is a guide to the status quo.
Trade in Goods
The United States ran a merchandise trade deficit of $3 billion with the United Kingdom in 2015. The value of US goods exported to the United Kingdom was $56 billion, and the United States purchased $59 billion of goods from the United Kingdom. Total trade in goods with the United Kingdom contributed 3 percent to US two-way merchandise trade with global markets, making it America’s 7th largest trading partner last year. The United States was a net exporter of machinery and transport equipment, miscellaneous manufactured articles, and inedible crude materials to the United Kingdom, while a net importer of chemical products, beverages and tobacco, and mineral fuels from the United Kingdom (figure 1).
Trade in Services
The United States continued to be a net exporter of services to the United Kingdom in 2014. Total exports reached $64 billion and total imports were $50 billion, leading to a bilateral service surplus of $14 billion. The United States ran notable trade surpluses in financial services and intellectual property related services ($9 billion and $6 billion, respectively) and a $3 billion trade deficit with United Kingdom in insurance services (figure 2).
Foreign Investment
The United Kingdom has been one of major destinations of US foreign direct investment (FDI) as well as a key source of FDI in United States. The US direct investment stock in the United Kingdom was valued at $588 billion in 2014, accounting for 12 percent of US outward FDI stock to the world. About two-thirds of US direct investment in the United Kingdom went to holding companies ($248 billion) and finance and insurance ($152 billion) (figure 3). Meanwhile, direct investment by UK companies in the United States was worth of $449 billion in 2014, representing 15 percent of US total inward FDI stock. UK companies largely invested in the US manufacturing sector ($167 billion)—mainly chemicals—and depository institutions ($60 billion), which accounted for about half of the total stock of US inward FDI from the United Kingdom (figure 4).