Trade War Part 1 Overview & China 0 By: Chuck Vollmer & - - PowerPoint PPT Presentation

Trade War Part 1

Overview & China

By: Chuck Vollmer & Rick Amato

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U.S . International Trade S ince WWII

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U.S . International Trade S ince 1 977

4

U.S . International Trade In 201 7

Top 5 Trading Partners Exports & Imports % of Grand Total Trade Top 5 Trade Deficits by Country Trade Deficit % of Grand Total Deficit China $635 16% China $375 47% Canada $582 15% M exico $71 9% M exico $558 14% J apan $69 9% J apan $204 5% Germany $64 8% Germany $172 4% Vietnam $38 5% Top 5 Total $2,150

55%

Top 5 Total $617

78%

All Others $1,738 45% All Others $179 22% Grand Total $3,888 Grand Total $796

$3.9 Trillion $0.8 Trillion

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50 100 150 200 250 300 350 400 450 $ Billions

U.S . Goods Trade With China

WTO Entry

$375B

* Trade deficit was $14B higher

than January - M ay 2017

2018 $389B*

GDP Parity With USA

Trade Deficit 1 985 - 201 7

$4.7 Trillion

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U.S . Goods Trade With China

https:/ / www.ustradenumbers.com/country/china/

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50 100 150 200 250 300 350 400 450 $ Billions

China Per Capita Income

1 987 – 201 7 Wages Increas ed 26-Fold

$375B GDP PPP

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Trade War Part 2

European Union

By: Chuck Vollmer & Rick Amato

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U.S . Trade Deficit Las t 4-Decades

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201 7 Balance Of Trade

Goods $Billions Consumer Goods ($404) Automotive ($201) Capital Goods ($107) Industrial Supplies ($43) Other Goods ($35) Foods, Feeds, & Beverages ($5) Services Financial Services $81 Charges for Intellectual Property $77 Travel $76 Other Business Services $50 M aintenance Repair Services $18 Telecom, Computer, Info Services $2 Government Goods and Services ($3) Transport ($13) Insurance Services ($33)

Total Deficit ($572)

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20 40 60 80 100 120 140 160 180

$ Billions

U.S . Goods Trade With European Union

* Trade deficit was $8.5B higher than January - M ay 2017

$1 51 B

2018 $160B*

Trade Deficit 1 997 - 201 7

$2.0 Trillion

EU 1993

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Total Trade With Leading EU Nations

2017 $ Billions

Exports Imports Total Trade Deficit Surplus % of Total Germany $54 $118 $171

• $64
• 37%

United Kingdom $56 $53 $109 $3 3% France $34 $49 $82

• $15
• 19%

Italy $18 $50 $68

• $32
• 46%

Netherlands $42 $18 $59 $24

40%

Switzerland $22 $36 $58

• $14
• 25%

Ireland $11 $49 $60

• $38
• 64%

Belgium $30 $15 $45 $15 33% Spain $11 $16 $27

• $5
• 17%

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$- $10 $20 $30 $40 $50 $60 $70 $80 $ Billions

U.S . Goods Trade With Germany

* Trade deficit was $3.0B higher

than January - M ay 2017

$64B

2018 $67B*

Recession End

Trade Deficit 1 985 - 201 7

$1 .1 Trillion

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U.S . Goods Trade With Germany

https:/ / www.ustradenumbers.com/country/germany/

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Trade War Part 3

NAFTA and Other Leading Nations

By: Chuck Vollmer & Rick Amato

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U.S . Goods Trade With NAFTA

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• $10

$0 $10 $20 $30 $40 $50 $60 $70 $80

$ Billions

U.S . Goods Trade With Mexico

$71 B

* Trade deficit was $0.49B higher

than January - M ay 2017

2018 $71.5B*

NAFTA

Trade Deficit 1 985 - 201 7

$1 .1 Trillion

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U.S . Goods Trade With Mexico

https:/ / www.ustradenumbers.com/country/ mexico/

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$- $10 $20 $30 $40 $50 $60 $70 $80 $90 $ Billions

U.S . Goods Trade With Canada

* Trade deficit was $3.7B lower than January - M ay 2017

$1 7B

2018 $13B*

Trade Deficit 1 985 - 201 7

$1 .1 Trillion

NAFTA

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U.S . Goods Trade With Canada

https:/ / www.ustradenumbers.com/country/canada/

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$- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100

$ Billions

U.S . Goods Trade With J apan

Trade Deficit 1 985 - 201 7

$2.1 Trillion

$69B

* Trade deficit was $0.95B higher than January - M ay 2017

2018 $70B*

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U.S . Goods Trade With J apan

https:/ / www.ustradenumbers.com/country/ japan/

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• 5

5 10 15 20 25 30 35 40 45

$ Billions

U.S . Goods Trade With Vietnam

* Trade deficit was $0.25B higher than

January - M ay 2017

$38B

2018 $39B*

Trade Deficit 1 992 - 201 7

$0.24 Trillion

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U.S . Goods Trade With Vietnam

https:/ / www.ustradenumbers.com/country/ vietnam/

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U.S . Goods Trade With Rus s ia

$1 0B

2018 $11B*

• 5

5 10 15 20 25 30

$ Billions

* Trade deficit was $0.23B higher than

January - M ay 2017

Trade Deficit 1 993 - 201 7

$0.23 Trillion

Crimea Annexation

2011 $26B

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U.S . Goods Trade With Rus s ia

https:/ / www.ustradenumbers.com/country/ russia/

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Trade War Part 4

U.S .-China Trade/Cold War?

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U.S .-China Trade/Cold War?

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50 100 150 200 250 300 350 400 450 $ Billions

U.S . Goods Trade With China

WTO Entry

$375B

2018 $389B Est

GDP Parity With USA

Trade Deficit 1 985 - 201 7

$4.7 Trillion

1 987 – 201 7 26-Fold Wage Increas e

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Tariffs , Quotas , Barriers § China has extensive tariffs, quotas and barrier on U.S. goods. § U.S. 2017 exports to China was $130B (mainly hi-tech) versus

$506B imports (mainly finished consumer goods). Trump Administration threatens tariffs on all $506B.

§ M ajor risks/ rewards:

• U.S. job losses: near-term up to -700,000, long term up to

+5,720,000 (assuming $100K per worker on $572B deficit)

• Stock M arkets: U.S. markets flat. China markets down 16%.
• Inflation: higher costs (esp. consumer electronics autos).
• Global Growth: slow and maybe recessionary.

China res pons ible for 47% of U.S . trade deficits .

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Intellectual Property (IP) Theft

§ Co-Chairs: Jon Huntsman,

• Adm. Dennis Blair

§ IP theft (cyber, counterfeits,

software piracy and trade secrets theft) costs the American economy as much as $600 billion a year.

§ China responsible for 50% of

total IP and 87% of imported counterfeit goods to the USA.

China res pons ible for 50% of U.S . IP theft.

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Chines e Inves tment Priorities

§ One Belt One Road Initiative § Digital Economy (500M Rural Poor) § Energy Economy § Banking § Economic hegemony

$1 Trillion

Sovereign Wealth Fund 2018

China Investment Corporation

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Foreign Inves tment Ris k Review Modernization Act (FIRRMA)

FIRRM A expands the jurisdiction of the Committee on Foreign Investment of the U.S. (CFIUS) beyond its current focus on inbound foreign investment to include outbound foreign investment, particularly when joint ventures result in U.S. companies sharing national security-sensitive technology with their foreign partners, with emphasis on China.

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FIRRMA Expanded J uris diction

§ Bankruptcy and Distressed Debt § Real Estate

(national security-sensitive installations)

§ Transactions Involving Critical Technology

(start-up and breakthrough technologies)

§ Transactions Involving Critical Infrastructure

(including non-controlling passive investments and large class of foreign-backed projects)

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FIRRMA Expanded J uris diction (Cont.)

§ Sensitive Personal Data

(concern over Chinese and Russian cyber hacks of government, corporate and personal data)

§ Change in Rights

(control or influence where the foreign person already has an investment stake)

§ Transactions Intended to Evade CFIUS Review

(e.g., complex investment vehicles)

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U.S .-China Trade War? Probably not. U.S .-China Cold War? Already s tarted. Conclus ion

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Free Trade vers us Reciprocal Trade

“ After WWII, when the US had 50% of the world’s GDP, we had a moral obligation to be charitable and help rebuild Europe and Asia. Considering

• ur

nascent recovery from the economic crisis, shifting geopolitics, and the magnitude of U.S. debt, Americans can no longer afford to be economically naïve and have a reason to be cautious.”

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Reciprocity

“ Jobenomics recommends a policy

• f

reciprocity

— a policy in commercial dealings between countries that is based on mutual giving and receiving. The relationship between the U.S. and countries like Canada, Britain, and Australia would be rooted in free

• trade. The relationship between

countries

• verly

protectionist would be based on reciprocal measures, until that country amended its arbitrary practices.”