For China, Canada and Japan, three of the United States’ top four trade partners, their 2020 trade will be their worst showing in eight to 12 years, when annual statistics are released next week.
The fortunes will be just the opposite for six other top 20 trade partners, which will set all-time records: Switzerland, Taiwan, Vietnam, Ireland, Malaysia and Thailand.
For top-ranked China, it’s all about the trade war former President Donald Trump had waged since the spring of 2018, when he proclaimed trade wars easy to win, and continues under Biden. China-U.S. trade will fall to the lowest level since 2012. U.S. imports from China will have taken the biggest dive. Nevertheless, China will overtake Mexico to rank as the nation’s top trade partner.
For No. 3 Canada, its fortunes were tied to the coronavirus pandemic. Its trade will fall to a level not seen since 2009. U.S. trade with Canada is closely tied to oil and automotive — and both took a dive in 2020 when the U.S. economy was shuttered in the late spring.
For No. 4 Japan, it’s all about automotive imports, which means it’s all about coronavirus. While its total trade will fall to a level not seen since 2010, U.S. imports from there will probably be the second-lowest total in a quarter century.
That’s the bad news.
The good news is that trade with six nations set records.
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Though if you’re a deficit hawk, you should stop reading now since the news is uniformly bad news.
For No. 8 Switzerland, it’s record trade, which was up an unheard-of 52% through November, will be indirectly about Covid-19. Imports in two primary gold categories are up from about $1.1 billion through November of 2019 to almost $29 billion for the same 11 months of 2020. While gold usually heads to Switzerland in times of financial distress, last year it flowed to the United States from there. Consequently, the U.S. deficit with Switzerland in 2020 will be more than double what it was in 2019, more than triple what it was in 2018 and more than quadruple was it was in 2018.
For No. 9 Taiwan, it’s about the U.S.-China trade war, a pattern than will repeat itself with the three other record-setting U.S. top 20 trade partners, all Asian nations: Vietnam, Malaysia and Thailand. Some companies have looked to shift final assembly and some manufacturing away from China. In Taiwan’s case, the United States’ imports of computers increased 48.23% through November, cell phones and related equipment jumped 29.08, and the category dominated by digital storage devices increased 56.17%. The U.S. deficit with Taiwan will have doubled since the onset of the trade war with China.
For No. 10 Vietnam, the trade war with China has been a bonanza. For the first time, Vietnam will enter the nation’s top 10 trade partners, which account for two-thirds of all U.S. trade. It has registered large gains in shipments to the United States of furniture, automotive and other seats, and computer chips. It will jump ahead of Japan and Germany to have the nation’s third-largest U.S. deficit, trailing only China and Mexico.
For No. 12 Ireland, the story is directly tied to Covid and, more specifically, the pharmaceutical industry in which it has been thriving for years. When figures are released next week, 2020 will prove to have been the sixth consecutive record year for U.S.-Ireland trade. That’s an indication of the growing importance of pharmaceutical trade, before anyone had heard of Wuhan, China. For every dollar of trade between the two countries, only 13 cents is a U.S. export, a balance of trade not dissimilar from the ratio the United States has with China. It is one of two European nations among the top 20 that will have set a record in 2020, joining Switzerland.
No. 18 Malaysia is another Asian technology outlet for U.S. imports. For example, it is the source of 47% of all U.S. computer chip imports. Among its top 10 imports are, in addition to computer chips, which account for more than one-third of the total, photo-sensitive semiconductors, cell phones and related equipment, printers, digital storage devices, computers, medical technology including monitors, and computer parts. For Malaysia, 2020 will mark the fourth consecutive record year of U.S. trade. The U.S. deficit with Malaysia will have set a record eight of the last nine years.
No. 19 Thailand, more than the other top 20 Asian nations that will break records in 2020, saw significant increases in technology imports. Computers rose 40.91% through November, cell phones were up 32.07% and photo-sensitive semiconductors increased 134.05%. The U.S. deficit with Thailand will have increased about 30% in 2020.