Over the past 30 years, the composition of U.S. trade among its partners has changed dramatically. New economic powers, trade agreements, technological advancements, and changes in policy preferences are all contributing factors. The four graphs in this post examine the evolution of imports, exports, and trade balances between the U.S. and four of its largest trading partners: China, Canada, Mexico, and Japan. The graph above shows trade patterns between the U.S. and China from 1985 to 2015. Both imports and exports have dramatically increased, but imports have outpaced exports, resulting in a large trade deficit. (See the green line, which corresponds to the right y-axis: Points below zero indicate a trade deficit.) This pattern is not the same for all trading partners, however. In the graphs below, imports and exports have increased for both Canada and Mexico as well, but they have remained relatively flat for Japan. Similarly, although the U.S. trade deficit has increased with Canada and with Mexico, it has done so at a much slower pace than it has with China. After the latest recession, trade deficits have moderated, which is most noticeable for U.S. trade with Canada, which has become almost balanced.
How these graphs were created: Search FRED as follows: For imports, search for the “U.S. imports of goods from [country x] customs basis.” For exports, use the “Add Data Series” option to search for and add “f.a.s. basis series for [country x].” Use the “Create your own data transformation” option (under the “Edit Data Series” section) to transform both series to natural logarithms (logs). For the third series, use the “Add Data Series” option to re-add the imports series as a new series; then, use “Add Data Series” option again to add the export series, but under the “Modify existing series” option for Data Series 3; finally, under the data transformation option, type “b-a” into the transformation field and set this third series to appear on the right y-axis.
Suggested by Maxmiliano Dvorkin and Hannah Shell.