Trump’s 2.0 unwinding of Pax Americana has started to affect US equities and may revive inflation. But the regional impact may not be that harsh as trade flows have changed dramatically since 2000. 

It is not easy being a superpower in the age of Big Tech and social media. Tariffs, like sanctions, are these age-old, blunt instruments that try to shift trade flows in a world awash with savvy influencers prodding consumers hooked to their smartphones to stock up on those very offending goods in real time.

Sugar High

Many years from now, it could be that hindsight will reveal that most of their impact was to give the sovereign nation imposing them an economic sugar high that they were getting things done, and in the way that they want, but not all that much more.

But as we bid farewell to GATT, the WTO and many features of the global free market most millennials, baby boomers and Gen Xers grew up with, it is also important to recognize how much the trade picture has changed in the last quarter of a century.

Stark Perspective

A popular visualization on Voronoi puts the trade relationship between the US and China in stark perspective. 

In 2000, US trade abroad was $2 trillion, more than four times that of China, which totaled $474 billion. Back then, the mainland was the main trading partner for handful of countries, including long-time allies such as North Korea.

Clearly Overtaken

Since then, China’s trade has grown by 1,200 percent, Voronoi indicates, while the US has increased 167 percent. In 2012, the mainland took the top spot worldwide, a position it has only expanded since then.

It could be that it is those very percentages that some of Trump 2.0 cohorts want to get at, but the problem is that China is now the dominant trading partner for most of our region, Eastern Europe, the Middle East, Oceania, South America, and Africa.

Coming Out On Top

If the US raises tariffs while China doesn’t, except to reciprocate the American measures directly, who has the comparative economic advantage afterwards?

In the international arena, you would have to give it to China, as they just need to keep the status quo and not do what the Americans are doing to keep their relative advantage. 

Muddled Picture

In the US, as another piece in Statista from February indicates, the picture is more muddled. China, Mexico, and Canada, the countries subject to the overnight tariffs, are the US’s main trading partners, importing 43 percent of all goods and forming 41 percent of all exports.

That means that the tariffs, as Statista says, have «the potential to hurt US business and consumers alike». Still, the US is less reliant on trade than other countries, with it being about a quarter of the country’s total GDP in 2025.

Minus One

But China is also not as sorely dependent on the US as the other two countries are, and it accounts for only 15 percent of total exports. 

That means that, below the line, it seems the best thing for the future of the wider Asia Pacific region is to simply keep trading among themselves, minus one certain superpower. All in all, it will make for a very interesting, and busy time, for the average international commercial banker.