With
international trade being of particular interest to the Trump Administration, I
thought it would be prudent to provide my readers with an interesting glimpse
at how American trade with its key trading partners has changed over the past
two decades and how this has impacted U.S. workers. For the purposes of
this posting, I will be using foreign trade data provided by the United States Census
Bureau for consistency.
Let's start by looking at America's
top four goods trading partners by full year going back to 2007:
2007 - Canada, China, Mexico, Japan,
Germany
In most years, these four trading
partners are responsible for just over half of all international trade in
goods. If we go all the way back to 2004, we find that China was America's
number three trading partner, three short years after China was granted status
under the World Trade Organization.
Let's look at more details on
America's largest trading partners; Canada, China and Mexico and the history of
goods trade balance with each nation:
1.) Canada:
As you can see, Canada's goods trade surplus with the United States is relatively small when compared to
that of China and Mexico and shrank markedly in 2008 - 2009 when it dropped
from a deficit of $78.3 billion in 2008 to $21.5 billion in 2009. Since
that time, it has fluctuated between $10.9 billion and $36.4 billion.
2.) China:
China's trade surplus with the
United States grew rapidly after December 2001 when China (under the prodding of then
President William J. Clinton) became a member of the World Trade Organization.
Since China joined the WTO, its trade surplus with the United States has
grown from $83.1 billion in 2001 to a high of $375.2 billion in 2017.
What is even more concerning is that, for the month of January 2018,
China's trade surplus with the United States hit a new record high of $35.92
billion as shown here:
This is well more than Canada's
trade surplus with the United States for an entire year.
3.) Mexico:
Mexico's trade surplus with the
United States grew very rapidly after the signing of the NAFTA
agreement in 1994. You
will note that in 1994, the United States actually ran a trade surplus of $1.3
billion with Mexico; this rapidly declined to a peak trade deficit of $74.8
billion in 2007. Since then, Mexico's trade surplus with the United
States has remained within a range of between $47.4 billion in 2009 to $71.1
billion in 2017, the second highest trade surplus in the past 24 years.
This trade data shows us that, by a
wide margin, China is responsible for the lion's share of the U.S. trade
deficit in goods which has looked like this since 1999:
Obviously, the importation of goods
from other nations has had a significant impact on one sector of the United
States economy in particular as shown on this graphic:
At its current level of 12.555
million workers, U.S. manufacturers are now employing 6.998 million fewer
workers than they did at the peak in June 1979. This has had a
significant impact on wage growth for those Americans that remain employed in
the manufacturing sector as shown here:
With this data in mind, it is
pretty obvious why Donald Trump's rally cry of "Make American Great
Again" resounded so profoundly in the former industrial heartland of the
United States and why international trade has become a focus of his
administration.
Follow the money and the United States huge trade deficit with Mexico becomes even more disturbing as you begin to understand where the money eventually ends up. When you start thinking about all the money and jobs we shift into Mexico each year you would think by now Mexico would be rolling in cash.
ReplyDeleteA bit of research quickly confirms that the money Mexico receives by way of trading with America quickly passes through its lands and flows to China. It could be argued that when all is said and done we are still transferring our wealth to the far east only by the scenic route. More on the problem with this in the article below.
http://brucewilds.blogspot.com/2017/11/follow-money-trade-deficit-with-mexico_21.html
There is only one reason why the U.S. have such big trade deficits, deficits vis-a-vis the half dozen big trading partners of Canada, Mexico, China and EU.
ReplyDeleteAMERICA CAN'T COMPETE. AMERICA CAN'T MAKE THINGS.
Sure U.S. still produce a huge volume of things - agriculture, foods, pharma, aerospace to name a few. But it has structured its economy to make these using highly automated robotics employing few people. It still employ large number of skilled people in aerospace, defense which bring in trillions in revenue. But much of these are no longer exported because other countries can make them too. That is, much of the world has caught up or exceeded the U.S. technologically.
The U.S. has built up a huge financial industry, service sector, the gigantic military-industrial complex. These industries, along with traditional ones, while produce a $12 trillion GDP, do not employ enough people. Do not export enough. Leaving vast trade deficits, budget deficits, stunning national debt, and some 100 million people un/under-employed. Such a privae sector is the doing of government policies that favor the corporations, implement the 'trickle down' economics. But of course no corporations, no billionaires will trickle down anything. It is also the results of government and the Federal Reserve who practiced unlimited borrowing and beyond unlimited creation of money over the past 4 decades.
Blaming foreigners is childish. Good but stupid politics as the rise of Trump shows. The only fix is to re-structure its own economy and society. No chance this will happen. Because given the nature of Americans, its history and politics, the only way fundamental reforms of the U.S. can occur is breakup to yield several countries. Each new country will write a new constitution designed to fix a whole lot of things.
Lastly, it has also been the intention of U.S. government to try to break things all over the world. It hopes other countries, economic systems, foreign banks, industries, even society will break before the U.S. breaks up. Thus opening up imperial opportunities, relieve some pressure for reform. As wise observers of world events can tell you, such a game plan has failed miserably. But it has created huge amount of suffering, deaths, collapses. No matters - all friends of the U.S. have become foe, all foes become enemies. And they are are wiser and can fix their countries better then the U.S. Not a single foreign government or country will help the U.S. fix itself.