In discussions of US worldwide financial ties, it generally feels a bit as if the one different nation value mentioning is China. Daniel Hamilton on the Brookings Establishment put collectively a listing of US worldwide financial ties in a brief essay “Who is America’s top commercial partner? (Hint: It’s not China.)” (March 21, 2024). Right here’s a desk from his article:
The primary column exhibits commerce in items, which is measured by including exports and imports to and from the US and the opposite financial system. China is behind the European Union, which is maybe not a shock, but additionally behind Canada and Mexico. However after all, commerce in items is just one a part of worldwide business relations, and never the fastest-growing half. Worldwide commerce in companies is commonly performed on-line, and right here the amount of US-EU commerce actually stands out (particularly if one provides in U.Ok.).
The third column of “foreign affiliate sales” measures the gross sales by, say, EU-affiliated corporations in the US and US-affiliated corporations within the EU. The rule-of-thumb is that “affiliation” means at the least 10% possession of the corporate. This class of agency is commonly entails in offshoring/onshoring choices: that’s, if an organization has a international affiliation, it’s going to determine on which location to hold out manufacturing and hiring for numerous duties. Right here, US connections with the EU (and the UK) are particularly robust.
The ultimate column exhibits “foreign direct investment,” which is the quantity of funding by these in a single nation by which they personal at the least 10% of a agency within the different space. (The ten% threshold is chosen as a result of it implies a “large enough” possession share to supply a voice in how the corporate is run.) Once more, the numbers within the desk are the sum of, say, US international direct funding within the EU and EU international direct funding within the US. On this space, US-China ties are smaller than US-Mexico ties, and both of these is a small fraction of the ties from the US financial system to Canada, the UK, and the EU.
I gained’t attempt to attract out any implications or classes right here. I’ll simply say that when interested by or discussing how worldwide financial ties have an effect on the US financial system, it’s helpful to have some magnitudes in thoughts.
