All four countries occupy significant spots on each other’s trade ledgers. — Reuters
A POTENTIAL trade war between the United States and its two neighbours has been thwarted for now, though the United States-China status remains murky after both parties implemented tariffs on Tuesday, their leaders yet to speak with one another as of late afternoon.
All four countries occupy significant spots on each other’s trade ledgers, though the highly diverse array of products and industries involved can complicate efforts to assess the impact of a trade dispute.
China, Canada and Mexico are the top three origins for US imports of all goods, accounting for about 45% of the value in 2022, which exceeded US$3 trillion.
On the export side, the same three countries are the top destinations for US exports of all goods, accounting for almost 39% of the total, valued near US$2 trillion in 2022.
Data from the Observatory of Economic Complexity helps break down this data a bit further.
Falling exports
The United States is the leading destination for Chinese goods and China is the No 3 destination for United States ones.
Both countries’ shares of each other’s exports have fallen since the first trade war began in 2018, though the United States’ piece of China’s exports has declined by a larger degree.
In 2019, the portion of US exports destined for China dropped to an 11-year low of 6.7% by value.
The pre-trade-war peak was 8.7% in 2017, and it settled at 7.7% in 2022.
The United States was the destination for 18% of Chinese exports by value in 2017 and 2018, though that share fell to 14.8% in 2022.
For Mexico and Canada, exports to the United States are overwhelmingly more critical by comparison.
In 2022, the United States accounted for 77% and 75%, respectively, of the total values of Mexican and Canadian exports.
China was the No 2 destination for Canadian exports at 4.3% of the value, and Canada was Mexico’s No 2 destination at 4.1%.
Canada and Mexico share a similar importance in US exports as they accounted for about 16% and 15% of the 2022 value, respectively.
Canada and Mexico also rely heavily on the United States for their imports, as US goods accounted for 56% of the value of all imports for both countries in 2022.
Mexico’s top US imports include items like machinery, electronics, appliances, crude oil and natural gas.
Those accounted for about 48% of the 2022 import value.
Cars and other vehicles are Canada’s top US import at nearly 17% of the 2022 value, followed by machinery, electronics and appliances at 21%.
The United States, South Korea and Japan are generally the top contributors to China’s imports, each accounting for around 7% of the total value between 2020 and 2022.
Soybeans factor
In each of those same years, soybeans were the No 1 US product imported by China, accounting for between 10% and 12% of the total value.
Although China’s latest retaliation did not include soybeans, the oilseed offers an example of a trade flow threatened not only by possible tariffs, but also by rival suppliers.
The United States over the last decade-plus has lost competitive advantage to Brazil, particularly in the agricultural space as Brazil’s output expands.
This trend can be felt at the wider scale. In 2002, the United States and Brazil combined to account for 10.6% of China’s total import value, only slightly lower than the combined 2022 share of 11.2%.
But Brazil over that period increased its individual share to 4.2% from 1.1%, and similar phenomena could ultimately result if the United States finds itself in prolonged tariff disputes with other trade partners. — Reuters
Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own.
