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5 Trade Imbalances are Key Factors in Trade War Concerns


The top-5, 2017 largest U.S. merchandise trade imbalances:

  1. China: -$375-billion
  2. Mexico: -$71-billion
  3. Japan: -$69-billion
  4. Germany: -$64-billion
  5. Vietnam: -$38-billion

The top-5, 2017 sources of U.S. merchandise imports:

  1. China: $506-billion
  2. Mexico: $314-billion
  3. Canada: $300-billion
  4. Japan: $137-billion
  5. Germany $118-billion

Consider: In a world of more than 7 billion people, racing toward 9 billion, the U.S. can no longer be the economic and military backbone of the world without countries contributing their share to economic growth, social progress, and homeland security. Decades of U.S. outsourcing has been about efficiency, but it has evolved into elevated levels of greed and increasingly has compromised efficiency.  Consider:

  •  China is predatory and protectionist, a clear and present danger to U.S. security, growth, and global leadership.
  •  Mexico’s growth and development model is highly inefficient. Mexico is at least two decades away from emerging as a progressive economy.
  •  Japan’s debt-burdened deflationary economy is dependent on their government’s ongoing purchases of their sovereign debt.
  • Germany, like the European Union, is economically dying due to heavy socialist entitlement programs, an immigration nightmare, and predatory attitude toward fellow European member countries.
  • Vietnam, a frontier country, represents a source of cheap merchandise, but at what price to American economic activity and viability?
  • The European Union is a flawed model with little hope of success due in-part to a fragmented sovereign bond and political system.

Globally, countries are increasingly focused on nationalism, regionalism, bilateral relationships, etc. due to fiscal, monetary, trade, and regulatory policy inefficiencies. Most of the world’s population is pro authoritarian governments (China and Russia) of varying types and increasingly hostile to open and capitalist driven governments.

President Trump is in search of fair balanced global trade relationships, which in the manufacturing sector implies rebuilding the U.S. manufacturing sector. This will be especially beneficial for the Southern United States.

 How important is trade to the U.S. economy?

In 2016 what countries were the largest global trading economies?

  •  In 2016, the top-five largest trading economies (in terms of the value of goods and services trade) were the United States, China, Germany, Japan, and the United Kingdom.
  • However, if the 28 EU members are treated as a single trading bloc, the EU would be the largest trading economy, with extra-EU trade of $5,512 billion.
  • China was the largest exporter, while the United States was the largest importer.
  •  In goods trade, the United States was the largest importer and second-largest exporter (behind China).
  • In services trade, the United States was both the largest importer and exporter.
  •  The U.S. share of global goods exports fell from 15 percent in 1960 to 9 percent in 2016, largely due to the rapid increase of global trade, especially among developing countries and emerging markets.
  • The U.S. export share of global services is 15 percent.

In 2016, U.S. exports and imports were equivalent to 26 percent of GDP. Although the United States is a major global trader, the size of trade relative to the size of the U.S. economy is smaller compared to other major trading economies.

Source: Bobby Coats, Delta Farm Press

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