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Change in 2012 from 2011:
- U.S. trade deficit: Increased by $17.2 billion (14 percent) to $138.5 billion
- U.S. exports: Decreased by $5.5 billion (2 percent) to $235.6 billion
- U.S. imports: Increased by $11.7 billion (3 percent) to $374.1 billion
The U.S. trade deficit with the EU widened by $17.2 billion in 2012 owing to an $11.7 billion expansion of U.S. imports and a $5.5 billion reduction of U.S. exports. This shift principally reflected economic contraction within key EU markets coupled with growth in U.S. consumer demand and investment. Relatively strong U.S. demand for EU-produced motor vehicles, in particular, translated into an $11.0 billion expansion in imports of transportation equipment—the largest category of U.S. imports from the EU in 2012 (figure EU.1).
U.S. exports to the EU fell by $5.5 billion (2 percent) to $235.6 billion in 2012, with lower exports of minerals and metals and electronic products driving most of these declines. Exports in these sectors fell by a combined $4.7 billion. During 2012, the EU economy struggled with financial and sovereign debt crises, high unemployment, and public sector austerity measures, all of which contributed to widespread declines in regional demand for goods and services (figure EU.2); U.S. exports to the EU declined in eight of the nine selected sectors. However, some of the widespread reductions in U.S. exports to the EU were offset by growth in chemicals and related products, which rose by $771 million to $54.4 billion. This sector remained the United States' largest export category to the EU in 2012.
U.S. exports of minerals and metals to the EU fell by $3.2 billion in 2012. Declines within this sector were principally driven by a $2.4 billion reduction in exports of precious metals and non-numismatic coins, especially refined silver. Relatively strong consumer demand for silver jewelry (the largest end use for silver) during the holiday season proved insufficient to overcome the lower industrial demand for silver, as fabricators scaled back production during the final quarter of the year in response to weakened industrial demand in Europe for key silver-consuming industries, such as consumer electronics, telecommunications, and renewable energy. U.S. exports of silver to Poland, Germany, and Italy—EU countries with major silver mining and refining operations —fell by $40 million (26 percent) to $110 million 2012.
U.S. exports of electronic products to the EU registered the second largest shift in trade during 2012, falling $1.5 billion to $35.1 billion. Much of this decline is attributable to a $442 million decrease in exports of semiconductor manufacturing equipment. Industry sources reported three major reasons for the reduced EU imports of semiconductor manufacturing equipment: large increases in semiconductor equipment purchases by Europe during the two previous years; decisions by firms to delay or halt investments in new capital equipment for semiconductor fabrication facilities in France, Germany, Ireland, and the United Kingdom; and depressed global demand for semiconductors in 2012. For the three largest U.S. semiconductor equipment manufacturing companies, Europe represented about 10 percent of sales annually over the past three years.
In contrast to the decline in total exports, U.S. exports of chemicals and related products increased by $771 million in 2012. Medicinal chemical export trade between parent companies in the U.S. and their affiliates in the EU drove most of the growth. These transfers do not necessarily reflect pharmaceutical market conditions in the countries involved but, instead, help multinational firms reduce costs while protecting intellectual property. Disaggregated production chains also can be part of firms' strategies of meeting demand in other countries.
U.S. imports from the EU increased by $11.7 billion (3.2 percent) to $374.1 billion in 2012. Transportation equipment imports registered an $11.0 billion increase. However, the overall expansion of U.S. imports was attenuated by a $5.1 billion reduction in U.S. imports of chemicals and related products from the 2011 level.
Most of the increase in the transportation equipment sector can be attributed to heightened U.S. demand for motor vehicles, imports of which increased by $5.6 billion (19 percent) in 2012. Increased domestic demand for motor vehicles—both foreign and U.S. made—reflected the greater availability of credit to finance automobile purchases; a general resurgence in consumer spending following widespread restraint during the economic recession of 2008–09; and replacement of the historically oldest fleet of U.S. cars. U.S. passenger vehicle sales increased 14 percent from 12.7 million in 2011 to 14.5 million in 2012. European producers in particular benefited from increasing U.S. demand for new models from Volkswagen and strong demand for Fiat's high-fuel-economy model 500.
Growing construction and mining equipment imports also contributed to the $11.0 billion expansion of transportation equipment imports from the EU. This growth reflected increased U.S. construction, up by an estimated $76.3 billion (nearly 10 percent), from $778.2 billion to $854.5 billion in 2012. Secondly, in 2012, many rental companies reportedly replaced their construction and mining equipment line. These companies represented an estimated 52 percent of the U.S. construction and mining machinery sales market.
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