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How would a Renegotiation of Trade Deals Affect Each State?

It’s safe to say that re-opening discussions about foreign trade has become a key priority under President Trump.Is this the right route to take?
Visual Capitalist creates and curates enriched visual content focused on emerging trends in business and investing. Founded in 2011 in Vancouver, the team at Visual Capitalist believes that art, data, and storytelling can be combined in a manner that makes complex issues and processes more digestible. Covering high-growth opportunities and industries such as technology, mining, and energy, Visual Capitalist reaches millions of investors each year. Visual Capitalist’s infographics have been featured in The Wall Street Journal, The New York Times, Zero Hedge, Maclean’s, Gizmodo, The Vancouver Sun, and Business Insider.
Visual Capitalist creates and curates enriched visual content focused on emerging trends in business and investing. Founded in 2011 in Vancouver, the team at Visual Capitalist believes that art, data, and storytelling can be combined in a manner that makes complex issues and processes more digestible. Covering high-growth opportunities and industries such as technology, mining, and energy, Visual Capitalist reaches millions of investors each year. Visual Capitalist’s infographics have been featured in The Wall Street Journal, The New York Times, Zero Hedge, Maclean’s, Gizmodo, The Vancouver Sun, and Business Insider.

How Reliant Is Each U.S. State on Foreign
Trade?

Whether it
is lashing out on China for unfairly weakening its currency, or calling out
“unfair” government subsidies on Canadian softwood lumber, it’s safe to say
that re-opening discussions about foreign trade has become a key priority under
President Trump.

Is this the
right route to take, and does America really need to negotiate new trade deals?

There are
arguments either way, but the the reality is that trade agreements like NAFTA
are perceived to have a mixed track record of success. Under NAFTA, trade volume
has exploded, prices have been lowered, and U.S. reliance on oil imported from
the Middle East has decreased, but at the same time, it is clear that
manufacturers, especially in the auto industry, have been setting up shop in
Mexico. As a result, at least partially, manufacturing jobs hover near all-time
lows.

Walking the Tightrope

The biggest
challenge with acting on these re-negotiation ambitions is that it’s inherently
risky, no matter how you slice it. Any big slip up or ill-advised trade war
could have a drastic impact on the economy.

Today’s
data visualization, which comes to us from HowMuch.net,
highlights this risk in a relatable way by showing the reliance on foreign
trade as a percentage of GDP for each state.

Here are
the state economies most
dependent
on
foreign trade:

The state that stands out the most? It’s Michigan, the country’s auto manufacturing hub.

In 2015, a total of $171.8 billion (38.0%) of economic activity in the state was linked to foreign trade. Whether that’s buying aluminum from Canada to build a lighter chassis for Ford F-150s, or it’s one of the 2.6 million vehicles that the United States exports to 200 countries every year – that’s a large chunk of economic activity to muck around with.

Right now, the global economy is built around trade. And regardless of whether re-negotiating trade agreements is the right or wrong thing to do for Trump, the potential risks of any missteps ought to be respected.

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