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United States Was the World's Largest Exporter and Importer of Services in 2018, Reports USITC

July 28, 2020
News Release 20-076
Inv. No. 332-345
Contact: Peg O'Laughlin, 202-205-1819
United States Was the World's Largest Exporter and Importer of Services in 2018, Reports USITC

The United States is the world's largest services market and was the world’s leading exporter and importer of services in 2018, reports the U.S. International Trade Commission (USITC) in its new publication Recent Trends in U.S. Services Trade, 2020 Annual Report.

The USITC, an independent, nonpartisan, factfinding federal agency, compiles the report annually. Each year's report presents a qualitative and quantitative overview of U.S. trade in services and highlights some of the services sectors and geographic markets that contribute substantially to recent services trade performance.

This year’s report focuses on financial services and includes chapters on three specific industries: banking services, insurance services, and securities services. Each chapter analyzes global market conditions in the industry, examines recent trade performance, and summarizes the industry’s outlook.

The report describes trade in services via cross-border transactions through 2018 and via affiliate sales through 2017 (latest available data). Highlights include:

  • The services sector represents the largest sector of the U.S. economy, and the United States is the world’s top cross-border exporter and importer of services. In 2018, U.S. exports of private services totaled $805.7 billion, whereas imports totaled $544.3 billion. Preliminary data indicate that cross-border exports of private services rose by 2.2 percent to $823.7 billion in 2019, while imports rose to $571.3 billion. Financial services accounted for 16 percent of total cross-border services exports and 14 percent of imports.

  • Within the services sector, sales by foreign affiliates of U.S. firms – the leading channel by which many U.S. services are delivered to foreign markets – totaled $1.6 trillion in 2017 while the value of services purchased from foreign-owned affiliates in the United States totaled $996.0 billion. Financial services accounted 19.8 percent of total sales by the foreign affiliates of U.S. firms and 17.6 percent of total purchases from the U.S, affiliates of foreign firms.

  • In 2018, the value of financial services totaled $1.4 trillion, or 8.6 percent of total U.S. private sector gross domestic product. Financial services were also an important contributor to U.S. private sector employment in 2018, accounting for 5.7 percent of the private sector workforce, or 6.7 million full-time equivalent employees. Workers in the financial services industry earned, on average, $108,050 per year in 2018, significantly higher than the average private sector wage of $63,306.

  • A well-developed financial services sector provides the economic infrastructure necessary for modern economies to function by mobilizing savings, allocating capital to productive activities, facilitating personal and commercial transactions, and providing instruments to manage risk. Financial services are essential to the production of nearly all goods and services and are crucial facilitators of international trade.

Over the past few years, a number of financial services trends stand out:

  • the traditional banking industry is facing growing competition from both financial technology (fintech) startups and more established “big tech” companies;

  • insurance companies have developed new lines of insurance that address both emerging cyber risks, like corporate data breaches, and long-standing risks associated with natural disasters; and

  • major emerging markets like China and India have announced measures that may serve to liberalize certain financial services market segments; some U.S. securities firms have taken steps to move into China.

The USITC hosted its 13th annual services roundtable on October 23, 2019. The discussion, summarized in the report, focused on the impact of policy uncertainty (such as Brexit or U.S.-China trade negotiations) on output, trade, and the liberalization of trade rules in services industries, and the impact of market factors (such as increasing automation or science, technology, engineering, and mathematics skills shortages) on the capital/labor ratio in services industries, as well as the effect of shifts in the relative importance of these factors on trade patterns and competitiveness.

Recent Trends in U.S. Services Trade, 2020 Annual Report (Investigation No. 332-345, USITC publication 5094, July 2020) is available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub5094.pdf.

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