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The 'Tariff War' and US Total Trade

Given the hyperventilating over trade tariffs and the expected increase in inflation that is yet to come, how 'vast' has been the actual impact that the 'tariff wars' have had on total US trade?

Not very.


Previously we've discussed the fact that import prices have actually fallen over the period by about 1% and inflation has decreased over the period as well. Looking at trade 'totals', both imports and exports in $US value we see that the total effect has been negligible.

In the chart you can see imports and exports overall and with our largest trading partners thru the end of Q2 2019 on a Quarter over Quarter and a Year over Year basis.


The results: Total Exports YoY up 1.7% Total Exports QoQ up 0.8% Total Imports YoY up 1.6% Total Imports QoQ down 1.5% (goods driven/China)


Our trade with the EU is greater than with China and we can see both strong import and export growth with them. The total $US value of trade with the EU last year was $805B while with China is was $660B. And, our trade with the EU is not nearly as one-sided.


Exports to EU YoY up 8.1% Imports from EU YoY up 7.4% Exports to China YoY down 12% (-$5.5B) Imports from China YoY down 11.5% (-$15B)


While exports to China on a % basis have fallen slightly more than imports in the last year, the dollar value for the Chinese has been 3x greater. Given the Chinese GDP is about 60% that of the US that has a 5-6X greater impact than it does to the US.


Similarly, our trade with Mexico and Canada is generally increasing although imports faster than exports (and the rise of the $US could be at play here). Our trade with Canada and Mexico, around $1.2T annually, will also be helped by USMCA when it is eventually passed.


With Japan, our 4th largest trading partner (not on the chart) we've also seen a more rapid increase in exports:

Japan Exports YoY up 7.6% Japan Imports YoY up 3.8%


Trade is complex and rarely a 'zero sum' game. Looking at that composition of trade year over year and quarter over quarter we see that it continues to grow for the US, even with the big drop in our trade with China. No reason to hyperventilate.


* Chart and data from Ycharts and www.census.gov

US TRADE

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