Ch. 2: World trade: An Overview

In 2018, the United States imported about $540 billion from China but ran a trade deficit of around _____ due to how little was exported.

$ 420 billion

The massive U.S. trade deficit of $420 billion with China in 2018 shrunk to around ____ in 2019 as U.S. imports from China fell by more than U.S. exports to China.

$345 billion

2019 U.S. trade statistics

- 864 B trade deficit in goods - 577 B trade deficit in goods & services - 288 B trade surplus in services - Exports down 0.5% - Imports down 0.4 %

Impediments to trade

- Distance - Geography - Borders

Catalysts to trade

- Trade agreements - Cultural affinity - Close distance/shared border

China importing $200 billion more of certain goods and services by 2021 is a hefty target as they only imported about _____ of goods from the United States in 2017, _____ in 2018, and _____ in 2019.

1. $ 130 billion 2. $ 120 billion 3. $107 billion

Five largest trading partners with the U.S.

1. China 2. Canada 3. Mexico 4. Japan 5. Germany

How much of the value of U.S. trade in 2015 did America's 15 largest trading partners account for?

75%

In the past, a large fraction of the volume of world trade came from _______, including a substantial portion of the imports and exports of the United States in 1910.

Agricultural and mineral products

Vertical disintegration

Before a product reaches the hands of consumers, it often goes through many production stages in different countries

In 2019, the United States ran a trade deficit in goods of $27 billion (and likely a trade surplus in goods and services) with which country?

Canada

The volume of trade (imports plus exports) between the United States and which country (or countries, measured individually) exceeded $600B in 2018?

Canada, China, and Mexico

Which country was the largest trading partner of the United States (U.S.) in 2015-2018 (based on the volume of trade in goods)?

China

Trade balance

Exports-imports

The gravity model states that bilateral trade between any pair of countries will be higher when either country is larger, as measured by

Gross Domestic Product (GDP)

In the past two years. U.S. trade with China, Canada, and Mexico has been growing faster than trade with

Japan and Germany

Based on 2015 data, the bulk of world trade (about 57%) occurs in

Manufacturers

Service offshoring

The change that occurs when a service previously done within a country is shifted to a foreign location.

Third world country trade

Transitioned from mainly exporting primary products to manufacturing products

Gravity Model implications

↑distance between countries = ↓ volume of trade between said countries ↑ country's economy = ↑ trade (imports/exports) ↑ each country's economy = ↑trade between two said countries

In 2018, the United States imported $3,129 billion, exported $2,501 billion, and ran a trade ____________ in goods & services.

Deficit of $628B

Traded goods

- Manufactured goods - Mineral products - Oil - Agricultural products - Services

Global trading patterns

- World trade grew rapidly prior to WWI but then WWI, WWII, Great Depression, and a resurgence in protectionism curtailed world trade and did not recover until 1970s - Since the 1970s, world trade as a fraction of the world GDP has risen to unprecedented heights, mainly as a result of vertical disintegration

Based on 2015 data, only 8% of world trade occurs in

Agricultural products

Based on the volume of trade with the United States, the key difference in 2019 compared to the previous four years was that _______ displaced _______ in the top position.

Mexico, China

Gravity Model

Volume of international trade between any two countries is proportional to the product of their GDPs and diminishes with distance between them.