{"id":139054,"date":"2025-03-17T07:05:22","date_gmt":"2025-03-17T07:05:22","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/trade-matters-less-to-us-than-to-other-economies\/"},"modified":"2025-03-17T07:05:22","modified_gmt":"2025-03-17T07:05:22","slug":"trade-matters-less-to-us-than-to-other-economies","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=139054","title":{"rendered":"Trade Matters Less to US Than to Other Economies"},"content":{"rendered":"


\n<\/p>\n

\n

Despite multiple tariff announcements, only extra 10% on China has gone into effect<\/strong><\/p>\n

We\u2019re a month into President Trump\u2019s second term, and tariffs have been an area of focus.<\/p>\n

Since there\u2019s a lot to keep track of, we have our trusty Tariff Tracker (table below), putting together all the tariffs that have been proposed, enacted, delayed, resolved, and studied \u2013 and when they might take effect.<\/p>\n

\n
\n
\n\"Tariff<\/p>\n

<\/source><\/source><\/source><\/picture>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

So far, only the additional 10% tariff on China has taken effect (and just yesterday President Trump said a trade deal with China \u201cis possible<\/a>\u201d). The rest are in limbo, and there\u2019s some question whether the delayed tariffs on Canada and Mexico will be watered down or ever take effect.<\/p>\n

Given all this uncertainty, let\u2019s focus on what we do know.<\/p>\n

1. Exports matter more to other countries than they do to the US<\/strong><\/p>\n

First, trade is a small part of the US economy.<\/p>\n

In total, exports are less than 11% of US GDP, and goods exports specifically are under 7%<\/a> of GDP.<\/p>\n

But this isn\u2019t the case for most other big economies.<\/p>\n

Exports to<\/u> the US (chart below, dark blue bars) matter more<\/a> to other economies than imports from<\/u> the US matter to the US economy (light blue bars).<\/p>\n

For example, Mexican exports to the US make up over one quarter<\/u> of Mexico\u2019s GDP, but Mexican imports from the US are just 1% of US GDP. For Canada, it\u2019s one fifth<\/u> of their GDP vs. 1% of US GDP (again).<\/p>\n

And those are the countries the US is most<\/em> reliant on (the EU as a group is only slightly larger).<\/p>\n

\n
\n
\n\"Goods<\/p>\n

<\/source><\/source><\/source><\/picture>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

Since exports are such a small piece of the US economy, that limits the amount tariffs can result in higher prices and reduced demand. But, tariffs could<\/em> have a bigger impact on countries more reliant on exports to the US.<\/p>\n

2. Tariffs still matter to trade patterns<\/strong><\/p>\n

Despite the likely limited impact to US economy, tariffs still matter to trade patterns.<\/p>\n

In 2018, during President Trump\u2019s first term, he enacted mostly China-focused tariffs.<\/p>\n

Since then, China\u2019s share of U.S. goods imports has nearly halved (chart below, red line) \u2013 limiting the inflationary impact of tariffs, as companies changed their suppliers or supply chains to mitigate the added cost of importing from China.<\/p>\n

With China\u2019s share falling, other countries saw their shares rise, as companies opted to source goods from elsewhere. The data shows this has benefitted China\u2019s neighbors (Taiwan, Korea, Vietnam), as well as Mexico (\u201cnearshoring\u201d) and the Eurozone (\u201cfriendshoring\u201d).<\/p>\n

\n
\n
\n\"Share<\/p>\n

<\/source><\/source><\/source><\/picture>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

The difference between President Trump\u2019s first and second terms is that he\u2019s proposed much broader tariffs this time around. If we end up with different levels of tariffs on different countries (e.g. 25% on Canada vs. 10% on Europe), though, then it\u2019s likely we\u2019ll see US imports shift to those countries with lower tariffs, to the extent possible.<\/p>\n

Given uncertainty around tariffs, still too soon to say much about their impact<\/strong><\/p>\n

However, many economists and pundits expect that President Trump is using these tariffs as negotiation tools<\/a> for eventual bilateral deals with countries. If that\u2019s the case, the already small impact of tariffs would end up even smaller. Right now, though, given the uncertainty about the final form of tariffs, it\u2019s hard to say much about their precise impact.<\/p>\n

The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED. \u00a9 2024. Nasdaq, Inc. All Rights Reserved.<\/em><\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"

Despite multiple tariff announcements, only extra 10% on China has gone into effect We\u2019re a month into President Trump\u2019s second term, and tariffs have been an area of focus. Since there\u2019s a lot to keep track of, we have our trusty Tariff Tracker (table below), putting together all the tariffs that have been proposed, enacted, […]<\/p>\n","protected":false},"author":1,"featured_media":135806,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[93],"tags":[24145,7633,9792],"dealstore":[],"offerexpiration":[],"class_list":["post-139054","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-economies","tag-matters","tag-trade"],"yoast_head":"\nTrade Matters Less to US Than to Other Economies - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=139054\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trade Matters Less to US Than to Other Economies - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Despite multiple tariff announcements, only extra 10% on China has gone into effect We\u2019re a month into President Trump\u2019s second term, and tariffs have been an area of focus. 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