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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
GLOBAL MACRO
The US trade deficit has widened close to $350bn since 2016, the first year of the Trump presidency. He has said that he would introduce a 10% tariff on all imports if he is elected again in November. An increase in protectionism will impact the US’ NAFTA partners the most given their high exposure to the US but it will also be a concern across Asia as many have a high exposure to the US or will feel indirect effects if China is targeted.
- Exports to the US would initially increase ahead of the introduction of further trade barriers. There is often a considerable lag between the announcement and enforcement. China’s deficit with the US widened in 2018 but trended lower thereafter, although numerous Chinese firms have set up production in Mexico to avoid restrictions and these may now be targeted.
- A 60% import tariff on all imports from China is proposed. The largest deficit continues to be with China, 2024 annualised deficit is $251.7bn but this is down from 2016’s $346.8bn. The EU is catching up at $222.2bn in 2024, as a result Europe is concerned about a Trump presidency.
US trade deficits by country US$bn 12-mth sum
Source: MNI - Market News/Refinitiv
- Exports to the US accounted for around 3% of GDP for both China and the euro area in 2023. They are a lot less reliant on US trade than others such as Canada (20.5% of GDP) and Taiwan (10.1%) though.
- There are other Asian nations that will be monitoring developments. Korea, Taiwan and Thailand have high export and GDP exposures to the US,and Japan and India export shares. Indirectly, Australia, Korea and Taiwan would also be significantly impacted by high tariffs against China.
- Trump renegotiated the NAFTA treaty during his first presidency but given US deficits with Mexico and Canada have increased further since the new agreement in 2020, more changes are likely if he wins the election.
Exports to the US % 2023
Source: MNI - Market News/Refinitiv
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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