0 Trade War Part 1 Overview & China
By: Chuck Vollmer & Rick Amato
U.S. International Trade Since WWII 2
U.S. International Trade Since 1977 3
4 U.S. International Trade In 2017 Top 5 Trading Partners Exports & Imports % of Grand Total Trade Top 5 Trade Deficits by Country Trade Deficit % of Grand Total Deficit China $635 16% China $375 47% Canada $582 15% Mexico $71 9% Mexico $558 14% Japan $69 9% Japan $204 5% Germany $64 8% Germany $172 4% Vietnam $38 5% Top 5 Total $2,150 55% Top 5 Total $617 78% All Others $1,738 45% All Others $179 22% Grand Total $3,888 Grand Total $796 $3.9 Trillion $0.8 Trillion
5 450 400 350 U.S. Goods Trade With China $375B 2018 $389B* $ Billions 300 250 200 150 100 50 Trade Deficit 1985-2017 $4.7 Trillion WTO Entry GDP Parity With USA * Trade deficit was $14B higher than January - May 2017 0
U.S. Goods Trade With China https://www.ustradenumbers.com/country/china/ 6
7 450 China Per Capita Income $ Billions 400 350 300 250 200 150 100 50 0 1987 2017 Wages Increased 26-Fold GDP PPP $375B
8 Trade War Part 2 European Union
By: Chuck Vollmer & Rick Amato
U.S. Trade Deficit Last 4-Decades 10
11 2017 Balance Of Trade Goods $Billions Consumer Goods ($404) Automotive ($201) Capital Goods ($107) Industrial Supplies ($43) Other Goods ($35) Foods, Feeds, & Beverages ($5) Services Financial Services $81 Charges for Intellectual Property $77 Travel $76 Other Business Services $50 Maintenance Repair Services $18 Telecom, Computer, Info Services $2 Government Goods and Services ($3) Transport ($13) Insurance Services ($33) Total Deficit ($572)
12 U.S. Goods Trade With European Union $ Billions 180 160 140 120 100 80 60 40 20 0 Trade Deficit 1997-2017 $2.0 Trillion EU 1993 * Trade deficit was $8.5B higher than January - May 2017 2018 $160B* $151B
13 Total Trade With Leading EU Nations 2017 $ Billions Exports Imports Total Trade Deficit Surplus % of Total Germany $54 $118 $171 -$64-37% United Kingdom $56 $53 $109 $3 3% France $34 $49 $82 -$15-19% Italy $18 $50 $68 -$32-46% Netherlands $42 $18 $59 $24 40% Switzerland $22 $36 $58 -$14-25% Ireland $11 $49 $60 -$38-64% Belgium $30 $15 $45 $15 33% Spain $11 $16 $27 -$5-17%
14 U.S. Goods Trade With Germany $ Billions $80 $70 $60 $50 $40 $30 $20 $10 $- Trade Deficit 1985-2017 $1.1 Trillion * Trade deficit was $3.0B higher than January - May 2017 2018 $67B* $64B Recession End
U.S. Goods Trade With Germany https://www.ustradenumbers.com/country/germany/ 15
16 Trade War Part 3 NAFTA and Other Leading Nations
By: Chuck Vollmer & Rick Amato
U.S. Goods Trade With NAFTA 18
19 U.S. Goods Trade With Mexico $ Billions $80 $70 $60 $50 $40 $30 $20 $10 $0 -$10 Trade Deficit 1985-2017 $1.1 Trillion NAFTA * Trade deficit was $0.49B higher than January - May 2017 2018 $71.5B* $71B
U.S. Goods Trade With Mexico https://www.ustradenumbers.com/country/mexico/ 20
21 U.S. Goods Trade With Canada $ Billions $90 $80 $70 $60 $50 $40 $30 $20 $10 $- Trade Deficit 1985-2017 $1.1 Trillion NAFTA * Trade deficit was $3.7B lower than January - May 2017 $17B 2018 $13B*
U.S. Goods Trade With Canada https://www.ustradenumbers.com/country/canada/ 22
23 U.S. Goods Trade With Japan $ Billions $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $- * Trade deficit was $0.95B higher than January - May 2017 Trade Deficit 1985-2017 $2.1 Trillion 2018 $70B* $69B
U.S. Goods Trade With Japan https://www.ustradenumbers.com/country/japan/ 24
25 45 40 35 30 U.S. Goods Trade With Vietnam 2018 * Trade deficit was $39B* $0.25B higher than January - May 2017 $38B $ Billions 25 20 15 10 5 0-5 Trade Deficit 1992-2017 $0.24 Trillion
U.S. Goods Trade With Vietnam https://www.ustradenumbers.com/country/vietnam/ 26
27 U.S. Goods Trade With Russia $ Billions 30 25 20 15 10 5 Trade Deficit 1993-2017 $0.23 Trillion * Trade deficit was $0.23B higher than January - May 2017 2011 $26B Crimea Annexation $10B 2018 $11B* 0-5
U.S. Goods Trade With Russia https://www.ustradenumbers.com/country/russia/ 28
29 Trade War Part 4 U.S.-China Trade/Cold War?
U.S.-China Trade/Cold War? 30
31 $ Billions 450 400 350 300 250 200 150 100 50 0 U.S. Goods Trade With China Trade Deficit 1985-2017 $4.7 Trillion WTO Entry GDP Parity With USA $375B 2018 $389B Est 1987 2017 26-Fold Wage Increase
32 Tariffs, Quotas, Barriers China has extensive tariffs, quotas and barrier on U.S. goods. U.S. 2017 exports to China was $130B (mainly hi-tech) versus $506B imports (mainly finished consumer goods). Trump Administration threatens tariffs on all $506B. Major risks/rewards: U.S. job losses: near-term up to -700,000, long term up to +5,720,000 (assuming $100K per worker on $572B deficit) Stock Markets: U.S. markets flat. China markets down 16%. Inflation: higher costs (esp. consumer electronics autos). Global Growth: slow and maybe recessionary. China responsible for 47% of U.S. trade deficits.
33 Intellectual Property (IP) Theft Co-Chairs: Jon Huntsman, Adm. Dennis Blair IP theft (cyber, counterfeits, software piracy and trade secrets theft) costs the American economy as much as $600 billion a year. China responsible for 50% of total IP and 87% of imported counterfeit goods to the USA. China responsible for 50% of U.S. IP theft.
34 Chinese Investment Priorities China Investment Corporation $1 Trillion Sovereign Wealth Fund 2018 One Belt One Road Initiative Digital Economy (500M Rural Poor) Energy Economy Banking Economic hegemony
35 Foreign Investment Risk Review Modernization Act (FIRRMA) FIRRMA expands the jurisdiction of the Committee on Foreign Investment of the U.S. (CFIUS) beyond its current focus on inbound foreign investment to include outbound foreign investment, particularly when joint ventures result in U.S. companies sharing national security-sensitive technology with their foreign partners, with emphasis on China.
36 FIRRMA Expanded Jurisdiction Bankruptcy and Distressed Debt Real Estate (national security-sensitive installations) Transactions Involving Critical Technology (start-up and breakthrough technologies) Transactions Involving Critical Infrastructure (including non-controlling passive investments and large class of foreign-backed projects)
37 FIRRMA Expanded Jurisdiction (Cont.) Sensitive Personal Data (concern over Chinese and Russian cyber hacks of government, corporate and personal data) Change in Rights (control or influence where the foreign person already has an investment stake) Transactions Intended to Evade CFIUS Review (e.g., complex investment vehicles)
38 Conclusion U.S.-China Trade War? Probably not. U.S.-China Cold War? Already started.
39 Free Trade versus Reciprocal Trade After WWII, when the US had 50% of the world s GDP, we had a moral obligation to be charitable and help rebuild Europe and Asia. Considering our nascent recovery from the economic crisis, shifting geopolitics, and the magnitude of U.S. debt, Americans can no longer afford to be economically naïve and have a reason to be cautious.
40 Reciprocity Jobenomics recommends a policy of reciprocity a policy in commercial dealings between countries that is based on mutual giving and receiving. The relationship between the U.S. and countries like Canada, Britain, and Australia would be rooted in free trade. The relationship between countries overly protectionist would be based on reciprocal measures, until that country amended its arbitrary practices.