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Affluent Christian Investor | September 19, 2017

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How Reliant Is Each U.S. State on Foreign Trade?

Foreign trade, as a % of GDP for each state.

Whether it is lashing out on China for unfairly weakening its currency, or calling out “unfair” government subsidies on Canadian softwood lumber, it’s safe to say that re-opening discussions about foreign trade has become a key priority under President Trump.

Is this the right route to take, and does America really need to negotiate new trade deals?

There are arguments either way, but the the reality is that trade agreements like NAFTA are perceived to have a mixed track record of success. Under NAFTA, trade volume has exploded, prices have been lowered, and U.S. reliance on oil imported from the Middle East has decreased, but at the same time, it is clear that manufacturers, especially in the auto industry, have been setting up shop in Mexico. As a result, at least partially, manufacturing jobs hover near all-time lows.

WALKING THE TIGHTROPE

The biggest challenge with acting on these re-negotiation ambitions is that it’s inherently risky, no matter how you slice it. Any big slip up or ill-advised trade war could have a drastic impact on the economy.

Today’s data visualization, which comes to us from HowMuch.net, highlights this risk in a relatable way by showing the reliance on foreign trade as a percentage of GDP for each state.

Here are the state economies most dependent on foreign trade:

The state that stands out the most? It’s Michigan, the country’s auto manufacturing hub.

In 2015, a total of $171.8 billion (38.0%) of economic activity in the state was linked to foreign trade. Whether that’s buying aluminum from Canada to build a lighter chassis for Ford F-150s, or it’s one of the 2.6 million vehicles that the United States exports to 200 countries every year – that’s a large chunk of economic activity to muck around with.

Right now, the global economy is built around trade. And regardless of whether re-negotiating trade agreements is the right or wrong thing to do for Trump, the potential risks of any missteps ought to be respected.

 

Originally published on Visual Capitalist.

Visual Capitalist creates and curates enriched visual content focused on emerging trends in business and investing. Founded in 2011 in Vancouver and reaching millions of investors each year, Visual Capitalist’s work has been featured in The Wall Street Journal, Gizmodo, The New York Times, Maclean’s, The Vancouver Sun, and Business Insider.

 

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