Today, the U.S. is the largest importer in the world. In 2019, the United States imported goods worth US$2.568 trillion into the country. It imported the most goods from China, followed by Mexico and Canada. In addition, Japan, Germany, Vietnam, Switzerland, South Korea, Ireland, Taiwan, and India accounted for about 27.5 % of other U.S. imports by 2020.
Given its size and high dependence on imports, the U.S. has established itself as a top market for businesses around the world. While China has traditionally been the top supplier of U.S. imports over the last decade, the new U.S.-China tariff trade war is expected to disrupt this partnership. It also creates a window of opportunity for new trading partners to emerge who will enable the U.S. to meet domestic consumer requirements.
The top 10 product groups imported into the U.S. currently are:
1.Machinery, including computers: This product group accounted for US$379 billion or 14.8% of total imports into the U.S in 2019. The subcategories demonstrating the strongest growth for this segment were semi-conductors, turbojets, transmission shafts, gears and clutches. While the growth rate for semi-conductors spurted ahead at 22.7%, it was followed by turbojets, which saw an impressive 16.9% increase from 2018 to 2019. The countries who have consistently been the leading suppliers for this product group are China, Mexico, and Germany, with China emerging as the top U.S. trading partner in this segment, reporting a market share of 27% by 2018. This was also a demonstration of sustained growth, with a 12.1% increase from the previous year. But recent U.S. tariffs of between 10% and 25% on Chinese goods have particularly targeted this product group and could leave room for new trade partners to emerge in this category.
All companies importing machinery into the U.S are required to comply with Environmental Protection Agency (EPA) regulations, including the completion of the EPA form 3520-21, and obtaining a customs bond. Further, machinery could also be subject to an additional set of regulations based on industry. For example, healthcare machinery is subject to U.S. Food and Drug Administration (FDA) regulation. Similarly, electronic machinery is supervised by the Federal Communications Commission (FCC) and tractors by the EPA. While complying with these regulations, the four key documents companies require to import machinery into the U.S. are an Arrival Notice, a Bill of Lading, a Packing List, and a Commercial Invoice. You can find more about these required documents in our earlier blog on shipping to the US.
2. Electronics equipment: US being the second highest importer of electronics in the world, this product group accounted for US$352.3 billion in U.S. purchases or 13.7% of total imports into the U.S in 2019. The subcategories that led the growth in this sector were phone system devices (including smartphones) and integrated circuits. But while these subcategories dominated the product group, they reported a decline from 2018 with a drop of 8.4% for phone system devices and 4.9% for integrated circuits. In contrast, the market for solar power diodes increased by 27.1% and electrical circuit boards and panels grew by 6.1% from 2018 to 2019. The countries who have been the top U.S. trading partners for this product group are China, Mexico, and Malaysia, with China dominating 42% of the market share for electronics imports by the U.S. in 2018.
All companies importing electronics equipment into the country must comply with U.S. Customs and Border Protection (CBP) regulations. Such goods are allowed either an informal or a formal entry. An informal entry is reserved for goods valued below US$2,500, while a formal entry is for goods valued at above US$2,500. All electronics equipment to be shipped into the country will require a Bill of Lading. In addition, formal entries would require a customs bond, which is a contact between an importer and the CBP. Such a bond could be either a single entry bond or a continuous bond. As the name suggests, a single entry bond is for single entry and is usually for low-cost and low-risk imports. On the other hand, continuous bonds are recommended for companies importing over four times a year and are for high-cost and high-risk imports. In addition to this, electronics equipment also falls under FDA regulations. The FDA requires all electronics equipment to be safe, durable, effective, and correctly labelled in the English language. Finally, companies importing radiation-emitting devices are required to fill in this declaration form to indicate compliance with FDA standards.
3. Vehicles and automobiles: This product group reported US$310.1 billion in U.S. purchases or 12.1% of the market share for imports in 2019. The top product subcategories for these groups are cars and automobile accessories. But trucks, public-transport vehicles, and tractors are now emerging as high growth segments within the country. While imports of trucks soared by 14.7%, public transport vehicles rose by 10.1%, and tractors increased by 7.6% from 2018 to 2019. The top countries supplying imported cars to the U.S. in 2019 were Japan, Mexico, and Canada, with the market share being almost evenly divided between all three countries. While Japan emerged as the leader and dominated 22.2% of the market, Mexico followed closely at 21.2%, with Canada at 21.1% by 2019. The largest decline in exports of cars to the U.S. were from Finland, which dropped sharply by 58.9%. This was followed by China, which went down by 25.5%. However, the biggest gainer amongst automotive suppliers was Belgium, which saw a massive 75.2% gain in its exports to the U.S. This was followed by Austria, which posted a growth rate of 37.2% in U.S. automotive imports in 2019.
All vehicles and engines imported into the U.S. are required to comply with EPA standard emissions and requirements. Nonconforming vehicles can only be imported after these are testified and modified and subsequently receive a certification from an Independent Commercial Importer (ICI). Alternatively, these must be exempted by the EPA. All motor vehicles must conform to the Motor Vehicle Safety Act of 1966, the Cost Savings Act of 1972, and the Clean Air Act of 1968, with subsequent amendments.
4. Minerals, fuels, and oil: The product group accounted for US$210.1 billion of purchases in the United States or 8.2% of the market share in 2019. The highest spends were on crude oil and processed petroleum oil. But looking to the future, coal is emerging as a high growth category with a spurt of as much as 9% in 2019. In addition, the demand for processed petroleum oils remains consistently high, with a slight increase of 0.7% in 2019. While the U.S. still produces up to 94% of the crude oil and petroleum products it consumes, the biggest exporters in these subcategories were Canada, Mexico, and Saudi Arabia. Amongst these countries, Canada dominated with 49% of petroleum imports and 56% of crude oil imports in 2019. For minerals, China and Canada were the top suppliers to the U.S. market from 2014-2018 with a market share of 16%. These countries were followed by Mexico at 10%. Imports from India have also demonstrated high growth, as it rose to become the fourth largest supplier of minerals to the U.S. by 2018. The largest increases amongst products imported into the U.S. in recent years have been in miscellaneous products of base metal and natural and synthetic gemstones. However, the U.S. has been increasingly concerned about its dependence on China for mineral imports. In 2020, President Trump also released an executive order, which sought to address the threat faced by the domestic supply chain because of its reliance on imports of 35 critical metals from foreign adversaries. The order directed federal agencies to take action to set up reliable domestic supplies for these minerals. The U.S. had earlier already imposed tariffs of up to 25% on minerals imported from China in 2019, removing only critical minerals and rare earths from the list.
U.S. mineral and fuel imports must comply with industry standards based on the downstream market for these products. Independent bodies across industries establish these standards and make importers accountable for quality. However, all minerals, fuels, and oils imported to the U.S. are subject to tariffs enforced by the U.S. Customs and Border Protection (CBP).
5. Textiles and apparel: With the U.S. emerging as one of the world’s largest apparel consumption markets, imported apparel into the country hit US$83.82 billion while textiles were at US$27.46 billion in 2019. This was an increase of 1.2% for apparel, but a slight dip of 2.3% for textiles from 2018 to 2019. But both areas showed a decline from the 3.4% growth rate of 2017-2018, with the U.S.-China tariff wars pushing down trade volumes. However, China remained the top textile supplier to the U.S. in 2019, accounting for 29.7% of the market share of imports. It was followed by Vietnam and Bangladesh. These were among 150 countries that were apparel suppliers to the U.S in 2019. With the U.S. now increasingly looking to diversify its supply chain, other countries also emerging as potential trading partners in this product group are Indonesia, India, and Mexico.
All companies seeking to import textiles into the U.S must comply with the EPA, Federal Trade Commission (FTC), Consumer Product Safety Commission (CPSC), and United States Department of Agriculture (USDA) regulations. While rules vary based on the country from where these products are imported, certain standard regulations apply. Businesses must clearly label packages to indicate country of origin, composition, manufacturer, and instructions regarding the handling of the textiles. Mixed products will also have to indicate manufacturing country and end-use. While the FTC verifies the product label, the EPA examines product toxicity, the USDA checks for the absence of synthetic products, and the CPSC tests flammability requirements. In addition, textiles valued at over US$2,500 will also require a customs bond.
6. Pharmaceuticals: Despite having a robust domestic pharmaceutical industry, the U.S. imports 20% of the world’s global pharmaceutical production . This product group accounted for US$128.2 billion or 5% of goods imported into the U.S in 2019. About 80% of this market consisted of generic drugs. While the top three suppliers by volume in 2019 were China, India, and Mexico, the top three suppliers by value were Ireland, Germany, and Switzerland. This sector has been largely unimpacted by the U.S.-China tariff wars because of the U.S. dependence on low-cost pharmaceuticals manufactured by China. In fact, China accounts for as much as 97% of all antibiotics drugs imported in US and a large portion of the active pharmaceutical ingredients used to manufacture drugs in the U.S..
All pharmaceuticals imported into the country must adhere to FDA regulations. According to these guidelines, a drug can be banned entry into the U.S. if found to be adulterated, misbranded, or unapproved by the FDA. The necessary documentation includes a Packing List, Bill of Lading, Importer Security Filing (ISF), Commercial Invoice, CBP Form 3461, CBP Form 7501, Arrival Notice, Customs Bond, and Commodity Specific Documentation.
7. Medical equipment and supplies: The U.S. is marginally more dependent on imports for medical equipment than pharmaceuticals, with imports accounting for 30% of domestic demand. The product group saw imports of US$96.9 billion and accounted for 3.8% of goods purchased by the country in 2019. The top suppliers of medical equipment into the U.S. were China, followed by the European Union, with China accounting for 28% of such products by 2018.
As with pharmaceuticals, any country seeking to import medical equipment into the US must be registered with the FDA. In certain cases, listing of devices may also be additionally required. Medical equipment will also need to have premarket notification or premarket approval to ensure devices are compliant with FDA standards. In addition, companies will have to ensure accordance of labelling with FDA standards, including the provision of intended use, unique device identification, disposal guidance, and warning statements. Labelling must also follow FDA language requirements. Finally, companies are required to provide complete medical device reporting, especially on any past product complaints, and medical device tracking of the product from the manufacturer to the customer. All devices are expected to conform to Food, Drug and Cosmetic Act guidelines and Medical Devices Regulations.
8. Furniture, lighting, and signs: This product group accounted for US$67.2 billion or 2.6% of U.S. imports in 2019. These products have seen a steady increase over the last decade, with the most popular subcategories being furniture and furniture parts, seats and seat parts, lamps and lighting fittings, and mattress supports and bedding. The top furniture suppliers to the U.S. have been China and Mexico, who together accounted for 68.2% of furniture imports in 2018. However, India, which is currently in ninth place, is also emerging as an important supplier, with consumers demonstrating a preference for the fine craftsmanship of Indian furniture.
Companies importing furniture, lighting, and signs into the U.S. have to comply with various regulations and complete specific paperwork based on the product subcategory and the country from which importation occurs.
9. Plastics: The product group accounted for US$60.6 billion or 2.4% of U.S. imports in 2019. Most plastic and plastic derivative imports into the U.S related to radial tires, electronics, and toys. The top suppliers of plastics to the U.S. were China, Canada, and Mexico by 2018. With a 27.17% market share of plastic imports, China looks set to maintain its dominance. However, this market could see a decline in the future with the U.S. looking to phase out single-use plastic. States like California are already setting the trend by mandating a 50% use of recycled plastic in beverage containers by 2030.
There are stringent guidelines applicable for plastic toys, kitchen appliances, and medical devices being imported into the U.S. All toys must comply with the Consumer Product Safety Improvement Act, better known as CPSIA. In addition, all food contact material and medical devices will need to conform to FDA regulations. These particularly relate to lab testing, product labelling, premarket approval, and documentation.
10. Gems and precious metals: With the U.S. emerging as the top manufacturer of gems in the world, this product group accounted for US$58.1 billion or 2.3% of U.S. imports in 2019. The top suppliers of gems to the U.S. have traditionally been Hong Kong and China. However, there is expected to be a shift in this position as the U.S. reviewed its preferential trade agreement with Hong Kong because of China’s crackdown on pro-democracy protests in the region and doubled import duty on gems and jewelry from 3.3% to 7.5%. Trade in this product group between the U.S. and China had already been impacted by the tariff wars between the two countries. Paradoxically, this is expected to create an opportunity for India, which already emerged as the top supplier of diamonds to the U.S in 2019.
All commercial imports of gems and precious metals into the U.S. will require a commercial bond. In addition, businesses will have to comply with the Patriot Act and Financial Center regulations. Further, companies would also need to stay abreast of sanctions preventing the import of diamonds from certain countries, most notably in recent times Angola, Liberia, and Sierra Leone.
Across product groups, all goods imported into the U.S. will be subject to import duties or tariffs. All tariffs will be collected by the U.S. Customs and Border Protection (CBP), but these could also vary based on product or country of export.
These 10 product groups have traditionally required global suppliers to meet U.S. domestic consumption requirements. In the future, there could be shifts in dominant trading partners or the demand for a subcategory, but these product groups are still projected to remain the top imports for the U.S. market in the immediate future.