Global trade has become a political battlefield of sorts in recent years. The fight between the world's two largest trading markets has had a chilling effect on the global market, with anticipated growth at its lowest rate since the 2008 banking crisis.
The back-and-forth tariff war between China and the United States is also influencing other trading partners, like the European Union, Mexico, and Japan. Retaliatory measures, such as the United States' recent threat to raise tariffs on Mexican goods if political concessions are not reached, not only creates the threat of retaliation but makes future trade negotiations challenging.
This retaliatory take on trade has reached India, whose government has imposed higher customs duties on American goods in response to the U.S. canceling Indian trade concessions.
International trade is one of the primary ways in which nations interact. Diplomatic relations between nations can often be judged by where a nation purchases goods from, what gets purchased, and how much. From engaging in trade with developing nations as a form of foreign aid to tariff battles and embargoes as a way of exerting political pressure, trade not only underwrites the fortunes of many nations, it's the engine that has built empires, triggered wars, and forged alliances.
To better understand the intricacies of global trade, Stacker has gathered 20 quick facts about global trade today. For each fact, we listed the source for the fact and why it is relevant. For this list, only sovereign nations will be considered. No extranational groups, like the European Union, or subnational divisions like Hong Kong, were considered for this article.
Since trade continues to be an issue of major controversy in modern politics, it has becomes that much more important to understand how modern trade works. For example, Mexico in 2018 imported $299.1 billion in goods from the U.S., compared to $371.9 billion in exports to the U.S. Despite this, it is incorrect to say that there is a $72.7 billion trade deficit between the countries. As some goods travel through regional trade hubs instead of U.S. Customs and Border Protection ports, the trade deficit may be much smaller or even nonexistent.
Keep reading to learn more—including where in the world is the most expensive place to buy American goods.
You may also like: Countries America has the largest trade surplus with
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China is the world's largest economy by purchasing power parity and the second largest by gross domestic product, according to a 2018 World Economic Forum report. The country is also the world's largest exporter. Fueled by a large, young workforce, weak labor protections, and easy access to material chains, China has been able to flood the market with cheap goods. However a slowdown in Chinese exports—largely from a slowing global economy—may trigger a recession in China and deep labor unrest due to the role of exports on the Chinese economy.
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In addition to having a robust banking industry, Liechtenstein also manufactures electronics, small car parts, precision instruments, pharmaceuticals, and dental products. While the nation's GDP of approximately $3.5 billion isn't initially that impressive, its relatively tiny population of about 38,000 makes it one of the world's wealthiest countries—and the largest exporter per capita.
With a population of approximately 602,000 (more than half of whom are foreign-born), tiny Luxembourg is one of Europe's least-populated countries. It's the second-richest nation in the world and has an economy driven by a strong banking and insurance sector, as well as a chemicals and rubber fabrication base. In 2017 the World Bank calculated that Luxembourg's exports totaled just over 223% of its GDP—the highest export ratio in the world
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The United States is the largest economy in the world: It is also the largest market. With much of the nation's manufacturing base off-shored for profit-saving reasons, the United States has become a principally service-driven economy. This means that most of the nation's consumer-based goods are either made in their entirety abroad or rely on foreign-made components. In fact the World Economic Forum reported that in 2018 the United States was responsible for a whopping 13.4% of global imports.
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Luxembourg makes the list again, this time for its staggering import ratio. While Luxembourg is a manufacturing giant relative to its size, it's also a highly mountainous region with a limited amount of arable land. Much of the nation's energy, food, and manufactured goods must be imported from neighboring countries or from the European Union common market. The World Bank says that in 2017 Luxembourg imported goods and services totaling 189.8% of its GDP.
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The U.S. and China's trade war may have started as both a response to allegations of Chinese spying and intellectual property violations and a misinformed understanding of global trade. The ramifications of this trade dispute have been felt by both nations' economies and also by the global market. China and the United States are the two largest economies in the world, and they are also each other's largest trading partners, with China importing American finished goods, like cars and electronics, and America importing components and household goods. The imposition on sourcing has led many of the United States' largest companies to call for an end to the tariffs.
In the decades since World War II, the global economy has steadily recovered its manufacturing capabilities, China, Japan, Germany, France, and the United Kingdom have all reestablished their industrial power, and new manufacturing powers like South Korea, Mexico, and Taiwan have emerged. While trade took a dip during the global recession, global trade volume has largely been on the rise.
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In 1969, the Vietnam War was raging, Richard Nixon was president of the United States, and Apollo 11 successfully landed on the moon's surface and returned home safely. The global economy continued its slow, steady rise, and trade rates hit just over 26% of global GDP. It wasn't until 1973, however, that the trade ratio would begin to skyrocket.
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Simply put, without international shipping, international trade cannot exist. Most trade involves a physical product, and these items—whether they be raw materials, assembly components, or finished goods—must be transported from seller to buyer. Ninety percent of goods traded globally are transported by the international shipping industry, according to the International Chamber of Shipping.
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As China is the world's largest exporter, it is logical that China's largest city (which is also the biggest city in the world by population) would be the globe's busiest container port. With most of the country's industrial base situated on the coast or along the Yangtze River, Shanghai is both geographically and historically important to Chinese global trade. While trade with China was limited to socialist nations until the 1990s, economic reform under Deng Xiaoping helped change the port's international profile.
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Not only has China managed to distinguish itself in shipping, but so has much of Southeast Asia. Due to the proximity to raw materials and lax labor laws, Singapore, South Korea, Thailand, Japan, and Malaysia have all taken leading roles in global exports.
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The Danish trading company Maersk operates in 121 countries and has a fleet of more than 786 ships serving 343 ports. Among Maersk's regional shipping companies are APM Terminals, DAMCO, Sea-Land, MCC, Safmarine, SeaGo Lines, Svitzer, and Hamburg Süd.
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The Asia-North America trade route is the most heavily trafficked in the world, with nearly 7.5 million TEUs (twenty-foot equivalent units—essentially a standard cargo container) making their way west and a staggering 19.5 million TEUs moving from Asia to North America each year. According to the World Shipping Council, there are 54 routes from Asia to the west coast of North America—more routes (just barely) than between any other points on the globe.
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Tariffs are taxes imposed on imports to discourage domestic purchasing and use. Smaller nations have used tariffs as a revenue collections method, particularly where there are no other means to collect sales or value-added taxes. Palau, St. Kitts and Nevis, and the Bahamas are all small archipelago nations without the infrastructure for efficient tax collection between the nations' islands.
Nations with no or low tariffs are relatively wealthy nations that have trade as a large part of their GDPs. These nations are afraid of triggering tariff wars, which would directly undermine their economies. Brunei, Singapore, and Chile are among the richest nations by GDP and income per capita on their continents. As major exporters (copper for Chile, petroleum for Brunei, electronics and refined petroleum for Singapore), these countries are incentivized to encourage trade.
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The United States is a major oil importer. It is also a major exporter. With the development of shale oil extraction, the country's position as a major energy producer was strengthened. A large part of the nation's oil infrastructure is petroleum refinement, including petroleum extraction.
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There is a strong tradition of art in the United States, with many of the biggest names in the modern art scene—Roy Lichtenstein, Robert Indiana, Alexander Calder, Cindy Sherman, Urs Fischer, and Richard Prince, to name a few—setting camp there. However, the reason for the growth in art exports is that movies, television programs, and video games are classified as art, and the United States is one of the largest producers of digital media in the world.
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While the first car was not made in the United States, the United States has been instrumental in the development and popularity of automobiles. The first mass-produced automobile was produced by the Oldsmobile Company in 1901, with the first car built on a moving assembly line being built in 1913 by Ford. The electric ignition, the electric self-starter, independent suspension, four-wheel brakes, and the modern driver control design are all American innovations. With two of the top 10 automakers in the world based in the United States, the U.S. remains a leader in global automotive market.
Miscellaneous edible preparations include extracts, essences, concentrates, food ingredients, sauces and sauce preparations, soups and broths, ice creams, and other foods sold in a form other than a natural form. With the nation facing large farming surpluses, many food producers are turning to food manufacturing to store, market, and sell their excess inventory.
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Besides petroleum, crude oil is the main ingredient of most of the materials that fuel the modern world. Lubricants, plastics, paints, chemicals, fertilizers, pharmaceuticals, and construction materials can all be made from crude oil. Without crude oil, global trade and the means to transport 90% of global trade would all stop. While there are substitutes for certain crude oil products, there is no one single substitution for crude oil currently available.