America’s Best Trade Partners

April 30, 2021

What’s it take to make the list of America’s 20 best trade partners? “Man-for-man,” (in other words, on a “per capita” basis) buy more from America than you sell to it. That’s it.

In my previous posts, we looked at our biggest trade deficits and biggest trade surpluses in 2020 and found that the population density of our trading partner was, by far, the biggest factor in determining whether our balance of trade would be a surplus or a deficit. On the surplus side, whether or not a country was a net oil exporter was also a factor, since all oil throughout the world is priced in U.S. dollars.

In my last post on the subject, we found that our biggest trade surpluses were with either sparsely populated countries or net oil exporters. But the list included both very large and very tiny countries. So let’s factor size out of the equation and see if population density is still a factor. Let’s look at the list of our biggest per capita trade surpluses in 2020. Here’s the list: America’s best trade partners in 2020.

The population density effect isn’t as clear on this list until you look at the population density of this group of nations as a whole – 22.5 people per square mile. Compare that to the density of the group of nations on the list of our twenty worst trade deficits – 360 people per square mile. Of the twenty nations on this list, thirteen are tiny nations, most of which are oil exporters. Two nations dominate this list – Canada and Australia – huge nations, comparable in size to the United States, with population densities of eleven and nine people per square mile respectively (compared to 93 people per square mile in the U.S.). Together, they account for 31% of our total trade surplus with the nations on this list.

This is a sad list. First of all, it doesn’t take much to make this list. If I were a country and I bought one recliner chair from the U.S., I’d be right at the top of the list. Secondly, our trade surpluses with the nations on this list has fallen by almost 9% over the past ten years. With the two dominant nations on the list – Canada and Australia – our surplus has declined by 33% and 34% respectively. Compare that to the 147% increase in our deficit with the nations on the list of our top 20 worst deficits. Also, consider that Djibouti made it onto this list of our top twenty surpluses solely on the basis of U.S. foreign aid to Djibouti. They didn’t even buy stuff from us. We gave it to them.

The fact is that American manufacturing is dying. 2020 marked the 45th consecutive year of ever-increasing trade deficits. We make less and less with each passing year, are forced to buy more from foreign countries, selling them less, and we export our high-paying jobs to them, all because we’re too stupid to factor the role of population density into our trade policy and apply tariffs to the most densely populated. In his first 100 days in office, President Biden, while proclaiming his desire to help American manufacturing, hasn’t levied a single tariff. He hasn’t lifted a finger to do anything meaningful to help American manufacturing workers.

So now we’ve looked at the two extremes of the trade spectrum – our twenty worst trade deficits and our twenty best trade surpluses. But that’s only 40 nations out of the more than 200 hundred around the world. Will the population density factor still be evident in 2020 when we look at trade with the entire world? We’ll see in one of my next posts.

America’s Top 20 Per Capita Trade Surpluses in 2009

January 7, 2011

My previous post examined America’s top 20 per capita trade deficits in manufactured goods for 2009.  We saw that 18 of the these 20 nations were characterized by a high (in most cases, very high) population density.  Only two were less densely populated than the U.S.  And, in contrast to conventional wisdom that says that trade deficits are caused by low wages, we saw that 16 of those top twenty deficits were with relatively wealthy nations.  All of this supports the theory that it is actually a large disparity in population density that drives trade deficits, a result of the inverse relationship between population density and per capita consumption.

But that’s just one end of the spectrum representing only 20 out of approximately 160 nations that were included in the study.  What about the other end of the spectrum?  Logic would dictate that, if high population density causes trade deficits, then America’s top 20 per capita trade surpluses in manufactured goods should be with nations characterized by low population density.  With that said, here’s the list:

top 20 surpluses

(Sources:  U.S. Census Bureau Foreign Trade – trade data; CIA World Fact Book – population, area and purchasing power parity data)

As expected, thirteen of the top 20 surpluses are with nations less densely populated than the U.S.  But there are seven exceptions, and it’s worth noting how  these densely populated nations ended up on the surplus (and not deficit) end of the spectrum.  First of all, Qatar, United Arab Emirates and Kuwait are very small, densely populated nations that just happen to sit atop vast oil reserves.  Each sells lots of oil and manufactures virtually nothing, using the proceeds from oil exports to finance the purchase of everything they need, including manufactured products from the U.S.

The inclusion of Lebanon on this list is probably a short-term fluke.  The CIA’s World Fact Book has this to say about the Lebanese economy:  “The Israeli-Hizballah conflict in July-August 2006 caused an estimated $3.6 billion in infrastructure damage, and prompted international donors to pledge nearly $1 billion in recovery and reconstruction assistance. Donors met again in January 2007 at the Paris III Donor Conference and pledged more than $7.5 billion to Lebanon for development projects and budget support, … Political stability following the Doha Accord of May 2008, helped boost tourism and, together with a strong banking sector, enabled real GDP growth of 7% in 2009 despite a slowdown in the region.”  In other words, international aid has fueled a surge in imports into Lebanon during their rebuilding.

Panama is only slightly more densely populated than the U.S.  Their economy is fueled by income from the Panama Canal that enables them to import a lot of manufactured products.

Of the seven nations more densely populated than the U.S. that appear on this list, that leaves only Belgium and The Netherlands – both among the most densely populated nations on earth.

In general, sparsely populated nations tend to be rich in resources, and they trade those resources for manufactured products.  Canada is America’s biggest source of imported oil.  Likewise, Australia is also a big exporter of resources.  Even tiny Guyana and Suriname are on the list for the same reason.  Suriname depends on exports of bauxite, gold and alumina.  Guyana depends heavily on exports of six resources:  sugar, gold, bauxite, shrimp, timber, and rice – which represent nearly 60% of the country’s GDP.

Belize has a tourism-based economy, somewhat unusual for a non-island nation.  Tourism dollars fuel their purchases of manufactured products.

Finally, as we saw in my study of the relationship between income (PPP) and trade, we see that the largest surpluses are with wealthy nations, just as our largest trade deficits (in per capita terms) are with wealthy nations.  High incomes tend to drive trade imbalances, both deficits and surpluses, while low incomes tend to produce smaller trade imbalances.

Now that we’ve looked at both ends of the trade spectrum, representing 40 nations, we’ll examine in an upcoming post the effect of population density of the sum total of all nations on the 2009 U.S. balance of trade.