Comment du Jour

Trading Places/USA Trade Tilts More to Asia


By John J. Metzler


United Nations—American exports surged last year to reach impressive new highs. Despite the recession, over $1.8 trillion dollars in U.S. goods were shipped worldwide. But before anyone thinks about popping the champagne corks to celebrate these new commercial successes, the U.S. Commerce Department also announced a dangerously high $498 billion trade deficit, representing an almost 33% increase which dampens the effervescence of the rebound.

American exports are booming for many reasons. A gradual global economic recovery, the quality of the products, and a weak dollar which makes the items more attractive, are among the reasons.

Trade partners and patterns illustrate so very much about international relations well beyond the business bottom line. East Asia’s growing economic weight brings the region enhanced political clout and global gravity.

As recently as 1990, seven of America’s top fifteen export destinations were European. As one would expect the United Kingdom, Germany, France, Netherlands, Belgium, Italy and Spain made the list. So too were Japan, South Korea and Taiwan. Back then, the People’s Republic of China was number 18.

But fast forward twenty years to 2010. Five European countries (UK, Germany, Netherlands, France, Belgium) made the list but new players abound. The “new world trade order” has Canada, Mexico, China, Japan, and the United Kingdom in the top five. Italy has been supplanted by Singapore.

Now let’s look at America’s imports. In 1990, four European countries (Germany, UK, France and Italy) were among the top fifteen. The top five still included Canada, Japan, Mexico, Germany and Taiwan.

In 2010, European countries made up five of the top fifteen sources of imports But the People’s Republic of China has shoved aside Canada, for first place, so the new top five list reads, China, Canada, Mexico, Japan and Germany.

Equally by 2010, China became the world’s second largest economy, pushing Japan into third place.

The China Trade has swamped American markets, devastated industries, and decimated jobs is glaringly obvious. While American businessmen are gloating over a record $92 billion in exports to the Mainland in 2010, the USA imported $365 billion in products from the People’s Republic. Thus Washington’s trade deficit with Beijing hit a dazzlingly dangerous $273 billion and that’s in a recession! Looking at it another way, this is $273 billion sloshing around in China’s coffers gives Beijing the bling to keep up its global raw materials buying binge.

To illustrate how things have changed in less than a generation, tiny but entrepreneurial Singapore (pop 5 million) now has larger two-way trade with the USA than does Italy (pop. 60 million). In today’s world high-tech items seem to surpass fine foods, wines and fashion.

Economic power is tilting towards East Asia and away from traditional West European partners. This allows Asia a growing commercial advantage as well as political weight in the global economic order.