World Trade – Winners and Losers

We hear a lot these days about countries having ”trade wars” between each other, most recently the United States vs China ”trade war” which was initiated by President Trump and is still ongoing. The United States has a huge trade deficit with China, world’s second largest economy and it will be interesting to see who if anyone will come out on top.

Winners

However, there are countries around the world that are quite happy with their overall trade balance and do not have to think about starting ”trade wars” with other nations. Germany is leading the way with the highest trade surplus in goods and services with China in second with $281 and $210 billion trade surplus in 2017 respectively.

Germany is the third largest exporter in the world, just behind China in first and the United States in second. Exports account for nearly half of its economic output for Europe’s largest economy, with main exports being motor vehicles, machinery, chemicals, electronics, and pharmaceuticals. It was the largest car exporter in 2017 making up 21.3% of the total car exports in the world.

Last year,  a huge 57% of the total exports from Germany went to 9 countries, including the United States, France, and Germany making them their biggest clients.

Losers

Even though the United States has the largest economy in the world, it has the biggest trade deficit in the world at $568 billion including goods and services. As mentioned above, since Donald Trump became the 45th President of the United States he has highly criticised the trade agreements the US has with some of the countries around the world. Most notably, the trading agreements with China and the North American Free Trade Agreement (NAFTA) to name a few.

When it comes down to the US trade with China, the US had a trade deficit of around $375 billion (goods only) in 2017, according to the US Census Bureau. That being said, the US actually had a trade surplus with China for services at around $38 billion last year, which would put the total trade deficit at around $336 billion, a large part of the total trade deficit from the total deficit with the rest of the world.

With the US shaking up the trade deals with other nations around the world, will we see their trade deficit reduce in the future? Time will tell.

Klāvs Valters

Market Analyst

Sources: Worldbank, Trading Economics