America’s 20 Worst Trade Partners

Who were America’s 20 worst trade partners in 2011?  First, we have to define “worst.”  By “worst” I mean those nations with whom the U.S. has its biggest trade deficits in manufactured goods.  By that simple measure alone, China is, hands-down, our worst trade partner by far.  But China is also a very large country with one fifth of the world’s population.  So we need to factor out the sheer size of nations to avoid having this list degenerate into nothing more than a list of nations by size.  A more appropriate definition of “worst trade partner” factors out size by expressing the trade deficit in per capita terms – that is, divided by the population of each nation in question. 

Now the results might surprise you.  Using that criteria, here’s a list of America’s 20 worst trading partners:  Top 20 Deficits, 2011

The following are some key take-aways from this list:

  • Of these twenty worst per capita trade deficits in manufactured goods, eighteen are nations more densely populated than the U.S.  (U.S. population density is 85 people per square mile.)  The average population density of these twenty nations is 491 people per square mile – almost six times as densely populated as the U.S.
  • Of these twenty nations, the average purchasing power parity (PPP) is $33,700 per person.  Only six have PPP less than $20,000 per person.  (Only one of the top ten has PPP less than $20,000.)  This tends to debunk the myth that trade deficits are caused by low wages.
  • Ireland is far and away America’s worst trading partner.  That tiny nation of only 4.7 million people (0.07% of the world’s population) accounts for 7% of our total trade deficit in manufactured goods.  On a per capita basis, our trade deficit with Ireland is 28 times worse than our per capita deficit with China.  Ireland’s trade surplus with the U.S. accounts for 16% of their PPP.  Our per capita trade deficit with Ireland in 2011 worsened by 18% from 2010.  Though Ireland is twice as densely populated as the U.S., that doesn’t account for such a gross imbalance of trade.  Ireland is the world’s champ when it comes to employing unfair trade practices, particulary in the form of subsidizing foreign manufacturers with a free tax ride.  Ireland, in turn, is subsidized by the European Union, being one of the first to require a bailout of their banking system. 
  • Of our top ten worst trade partners, five are EU members.
  • China (four times as densely populated as the U.S.) ranks 16th on the list, the same as their 2010 ranking. 
  • South Korea (15 times as densely populated as the U.S.), with whom the U.S. entered into a new free trade agreement early this year, is America’s 13th worst trade partner, the same ranking as in 2010.

It’s China that draws all of the attention in discussions about America’s trade deficit.  But, when you look at this list, it becomes clear that our trade results with China are no different than our trade results with many other nations.  The fault lies not with China’s trade policies, but with our own – a trade policy that fails to account for the role of population density in driving global trade imbalances.  Actually, the fault lies with the field of economics and its stubborn refusal to give any consideration to the potential consequences of population growth. 

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One Response to America’s 20 Worst Trade Partners

  1. […] in June, I published a list of America’s 20 Worst Trade Partners.  We saw that the list was heavily dominated by nations more densely populated (most were far more […]

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