Trade War Part 1 Overview & China 0 By: Chuck Vollmer & - PowerPoint PPT Presentation

Trade War Part 1 Overview & China 0

By: Chuck Vollmer & Rick Amato

U.S . International Trade S ince WWII 2

U.S . International Trade S ince 1 977 3

U.S . International Trade In 201 7 Top 5 Trade Top 5 Trading Exports & % of Grand % of Grand Deficits by Trade Deficit Partners Imports Total Trade Total Deficit Country $635 $375 China 16% China 47% $582 $71 Canada 15% M exico 9% $558 $69 M exico 14% J apan 9% $204 $64 J apan 5% Germany 8% $172 $38 Germany 4% Vietnam 5% Top 5 Total $2,150 55% Top 5 Total $617 78% $1,738 $179 All Others 45% All Others 22% Grand Total Grand Total $3,888 $796 $3.9 Trillion $0.8 Trillion 4

U.S . Goods Trade With China 2018 450 $389B* 400 $375B 350 300 GDP Parity Trade Deficit With USA 250 1 985 - 201 7 $ Billions 200 $4.7 Trillion 150 WTO Entry 100 * Trade deficit was $14B higher 50 than January - M ay 2017 0 5

U.S . Goods Trade With China https:/ / www.ustradenumbers.com/country/china/ 6

China Per Capita Income 450 400 $375B 350 GDP PPP 300 1 987 – 201 7 250 Wages Increas ed $ Billions 200 26-Fold 150 100 50 0 7

Trade War Part 2 European Union 8

By: Chuck Vollmer & Rick Amato

U.S . Trade Deficit Las t 4-Decades 10

201 7 Balance Of Trade Goods $Billions Consumer Goods ($404) Automotive ($201) Capital Goods ($107) Industrial Supplies ($43) Other Goods ($35) Foods, Feeds, & Beverages ($5) Services Financial Services $81 Charges for Intellectual Property $77 Travel $76 Other Business Services $50 M aintenance Repair Services $18 Telecom, Computer, Info Services $2 Government Goods and Services ($3) Transport ($13) Insurance Services ($33) Total Deficit ($572) 11

U.S . Goods Trade With European Union 2018 180 $160B* 160 140 $1 51 B Trade Deficit 120 1 997 - 201 7 100 $ Billions $2.0 Trillion 80 60 * Trade deficit was $8.5B higher 40 than January - M ay 2017 EU 1993 20 0 12

Total Trade With Leading EU Nations Deficit % of 2017 Exports Imports Total Trade $ Billions Surplus Total -$64 Germany $54 $118 $171 -37% United Kingdom $56 $53 $109 $3 3% France $34 $49 $82 -$15 -19% Italy $18 $50 $68 -$32 -46% 40% $42 $18 Netherlands $59 $24 Switzerland $22 $36 $58 -$14 -25% -64% $11 $49 Ireland $60 -$38 $30 $15 Belgium $45 $15 33% $11 $16 Spain $27 -$5 -17% 13

U.S . Goods Trade With Germany 2018 $80 $67B* $70 Trade Deficit $60 $64B 1 985 - 201 7 $50 $ Billions $40 $1 .1 Trillion Recession $30 End $20 * Trade deficit was $3.0B higher $10 than January - M ay 2017 $- 14

U.S . Goods Trade With Germany https:/ / www.ustradenumbers.com/country/germany/ 15

Trade War Part 3 NAFTA and Other Leading Nations 16

By: Chuck Vollmer & Rick Amato

U.S . Goods Trade With NAFTA 18

U.S . Goods Trade With Mexico 2018 $80 $71.5B* $70 Trade Deficit $71 B $60 1 985 - 201 7 $50 $1 .1 Trillion $ Billions $40 $30 $20 * Trade deficit was $0.49B higher than January - M ay 2017 $10 NAFTA $0 -$10 19

U.S . Goods Trade With Mexico https:/ / www.ustradenumbers.com/country/ mexico/ 20

U.S . Goods Trade With Canada $90 * Trade deficit was $3.7B lower than $80 January - M ay $70 2017 Trade Deficit $60 1 985 - 201 7 $50 $ Billions $1 .1 Trillion $40 $1 7B $30 2018 $20 $13B* NAFTA $10 $- 21

U.S . Goods Trade With Canada https:/ / www.ustradenumbers.com/country/canada/ 22

U.S . Goods Trade With J apan $100 * Trade deficit was 2018 $0.95B higher than $90 January - M ay 2017 $70B* $80 $70 $60 $69B $ Billions $50 Trade Deficit $40 1 985 - 201 7 $30 $20 $2.1 Trillion $10 $- 23

U.S . Goods Trade With J apan https:/ / www.ustradenumbers.com/country/ japan/ 24

U.S . Goods Trade With Vietnam 2018 45 $39B* * Trade deficit was $0.25B higher than 40 $38B January - M ay 2017 35 30 25 Trade Deficit $ Billions 20 1 992 - 201 7 15 $0.24 Trillion 10 5 0 -5 25

U.S . Goods Trade With Vietnam https:/ / www.ustradenumbers.com/country/ vietnam/ 26

U.S . Goods Trade With Rus s ia 2011 30 $26B 25 Trade Deficit Crimea 1 993 - 201 7 Annexation 20 $0.23 Trillion 15 $ Billions 2018 $11B* * Trade deficit was 10 $1 0B $0.23B higher than 5 January - M ay 2017 0 -5 27

U.S . Goods Trade With Rus s ia https:/ / www.ustradenumbers.com/country/ russia/ 28

Trade War Part 4 U.S .-China Trade/Cold War? 29

U.S .-China Trade/Cold War? 30

U.S . Goods Trade With China 2018 450 $389B Est 400 $375B GDP Parity 350 With USA 300 Trade Deficit 250 1 985 - 201 7 $ Billions 200 $4.7 Trillion 1 987 – 201 7 150 26-Fold WTO Entry 100 Wage Increas e 50 0 31

Tariffs , Quotas , Barriers § China has extensive tariffs, quotas and barrier on U.S. goods. § U.S. 2017 exports to China was $130B (mainly hi-tech) versus $506B imports (mainly finished consumer goods). Trump Administration threatens tariffs on all $506B. § M ajor risks/ rewards: • U.S. job losses : near-term up to -700,000, long term up to +5,720,000 (assuming $100K per worker on $572B deficit) • Stock M arkets : U.S. markets flat. China markets down 16%. • Inflation: higher costs (esp. consumer electronics autos). • Global Growth: slow and maybe recessionary. China res pons ible for 47% of U.S . trade deficits . 32

Intellectual Property (IP) Theft § Co-Chairs: Jon Huntsman, Adm. Dennis Blair § IP theft (cyber, counterfeits, software piracy and trade secrets theft) costs the American economy as much as $600 billion a year. § China responsible for 50% of total IP and 87% of imported counterfeit goods to the USA. China res pons ible for 50% of U.S . IP theft. 33

Chines e Inves tment Priorities China Investment $1 Trillion Corporation Sovereign Wealth Fund 2018 § One Belt One Road Initiative § Digital Economy (500M Rural Poor) § Energy Economy § Banking § Economic hegemony 34

Foreign Inves tment Ris k Review Modernization Act (FIRRMA) FIRRM A expands the jurisdiction of the Committee on Foreign Investment of the U.S. (CFIUS) beyond its current focus on inbound foreign investment to include outbound foreign investment, particularly when joint ventures result in U.S. companies sharing national security-sensitive technology with their foreign partners, with emphasis on China. 35

FIRRMA Expanded J uris diction § Bankruptcy and Distressed Debt § Real Estate (national security-sensitive installations) § Transactions Involving Critical Technology (start-up and breakthrough technologies) § Transactions Involving Critical Infrastructure (including non-controlling passive investments and large class of foreign-backed projects) 36

FIRRMA Expanded J uris diction (Cont.) § Sensitive Personal Data (concern over Chinese and Russian cyber hacks of government, corporate and personal data) § Change in Rights (control or influence where the foreign person already has an investment stake) § Transactions Intended to Evade CFIUS Review (e.g., complex investment vehicles) 37

Conclus ion U.S .-China Trade War? Probably not. U.S .-China Cold War? Already s tarted. 38

Free Trade vers us Reciprocal Trade “ After WWII, when the US had 50% of the world’s GDP, we had a moral obligation to be charitable and help rebuild Europe and Asia. Considering our nascent recovery from the economic crisis, shifting geopolitics, and the magnitude of U.S. debt, Americans can no longer afford to be economically naïve and have a reason to be cautious.” 39

Reciprocity “ Jobenomics recommends a policy of — a policy in reciprocity commercial dealings between countries that is based on mutual giving and receiving . The relationship between the U.S. and countries like Canada, Britain, and Australia would be rooted in free trade . The relationship between countries overly protectionist would be based on reciprocal measures, until that country amended its arbitrary practices.” 40