America Doesn’t Need Trade Like Other Nations Do

These ties don’t bind
From
Horizon Investments' Valliere Says NAFTA in Real Trouble

Donald Trump may have an upper hand in trade talks because America needs its partners less than any other advanced economy.

The Organization for Economic Cooperation and Development says the U.S. has the most limited ties to foreign commerce of any country in the group, using new measures that look at both trade and investment flows.

OECD

One such broader measure showed the “international orientation’’ of the U.S. was equal to 13 percent of gross domestic product in 2014, according to OECD figures tallied up last month. It's the first time the Paris-based group has calculated such a measure to track national income that is tied to both exports and profits made by the foreign affiliates of domestic companies.

And when it comes to Trump's threat to take on Mexico, such figures may strengthen his hand even further. Another wider trade measurement pushes Mexico further down the rankings of U.S. partners, leaving it behind Japan, the U.K. and Germany in sixth place. That’s worse than Mexico’s 2014 positions of second place for exports and third place for imports. 

OECD

One complication is the U.S. is negotiating with Canada as well as Mexico under the North American Free Trade agreement, which Trump has threatened to rip up. Trump has moved between suggesting he only needs tweaks from Canada to escalating tensions over dairy and aircraft markets. The fresher OECD data shows Canada is a harder trade partner to break up with, coming in with the No. 2 ranking in overall trade after China.

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