Our So-Called Foreign Policy: My Ukraine Peace Plan

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Russia, Ukraine, Our So-Called Foreign Policy, sanctions, diplomacy, NATO, energy, European Union, North Atlantic treaty Organization, EU, nuclear war, Ukraine War, World War 3

As I’ve repeatedly argued, every day the Ukraine war lasts, the United States runs an ever greater risk of the conflict going nuclear and the American homeland coming under attack. And as I’ve also argued, the creation of any such nuclear risk is completely unacceptable because despite all the military aid provided by Washington, the U.S government still hasn’t backed admitting Ukraine to the North Atlantic Treaty Organization (NATO). That alliance of course is made up of countries whose security the United States has officially designated as vital, and thus by definition worth incurring such risks.

So in order to ensure that U.S. leaders don’t continue exposing the American population to a catastrophe that would make the September 11 attacks look like a mosquito bite on behalf of a country Washington still doesn’t regard as worth that candle, the war needs to end ASAP. And here’s a plan (or as they like to say in the political and policy worlds, a “framework”) that might do the trick.

First, an immediate ceasefire is declared, and then enforced by troops from some of the large developing countries that have voted to condemn the Russian invasion but failed so far to provide Ukraine with any support (like India or Indonesia or Brazil).

Second, (and the sequencing of the following steps can take any number of forms), NATO announces that it will never admit Ukraine as a member, But  NATO and other countries reserve the right to provide Kyiv with as much in the way of conventional armaments (including systems considered as “offensive”) as they wish.

Third (Version A), Russia gets to keep the Crimea but agrees that the the two eastern Ukrainian provinces with the big ethnic Russian populations will decide their own fates in internationally supervised referenda. In addition, any inhabitants of all three regions who wish to leave either before or after such votes get relocation assistance (preferably to Ukraine, but other European countries should feel free to take them in, too). The funding would come partly from the West (mainly by the European members of NATO), and partly from a percentage of revenues earned by Russia from the dropping of sanctions on Russian energy exports.

Third (Version B), same as above but Russia simply gets to keep the two eastern provinces and Crimea outright. Again, however, emigration by any of their inhabitants is funded by the West and by those Russian energy revenues. For the record, I like version A best.

Fourth, Russia drops its objections to Ukraine joining the European Union (EU).

Fifth, in order to enable Ukraine to maximize the economic benefits of EU membership, the West (again, mainly the European members of NATO) commits to large economic aid and reconstruction packages dependent largely on Kyiv’s progress in rooting out corruption. I’d also be in favor of empowering the donors to bypass the Ukrainian government in financing worthy recipients directly, to ensure that Ukrainian officials don’t steal most of the assistance.

Sixth, non-energy sanctions on doing any kind of business with Russia are phased out contingent on the absence of Russian aggressive actions against Ukraine (including efforts by Russian-funded paramilitary groups to destabilize Ukrainian territory). That is, the longer Moscow behaves well toward Ukraine, the more sanctions get dropped.

Seventh, the West agrees not to prosecute any Russian officials (including military officers) for war crimes.

Eighth and last, Russia and NATO begin negotiations to explore ideas for new arrangements that longer term could further enhance the security both of Russia and its European neighbors, including the Balkans and Moldova. These initiatives should be led by the Europeans.

Because the above proposals are just a framework, and neither set in stone nor presented in any great degree of detail, I’m absolutely open to suggestion regarding modifications, refinements, and additions. But for anyone wishing to pony up their ideas, I hope they consider first and foremost the needs to (a) defuse an exceedingly dangerous current situation with frightening potential to damage the American homeland gravely; (b) give both Russia and Ukraine significant reasons to claim at least partial victories; and (c) realize how easy it is to make the perfect the enemy of the good.

And on that last point, I hope that Ukraine war hawks and others who stress the imperatives of punishing any and all aggressions, and/or forcing the Russians to pay serious penalties for their invasion, and ensuring that Russia in the future becomes to weak to endanger Ukraine or any other country ever again, would keep the following in mind: The current regime in Moscow is so mismanaging the country and wasting its considerable resources (especially human), that it’s doing a great job of diminishing its power and potential all by itself.

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(What’s Left of) Our Economy: Energy Drove the U.S. Trade Deficit Drop in a March Full of Records

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Advanced Technology Products, China, energy, European Union, exports, Germany, goods trade, imports, Made in Washington trade flows, manufacturing, Mexico, Netherlands, non-oil goods trade, oil, petroleum products, services trade, Trade, trade deficit, {What's Left of) Our Economy

The monthly improvement in the U.S. deficit in March revealed in today’s official U.S. trade report was first and foremost an energy story – not that other noteworthy developments couldn’t be found, specifically records in manufacturing and in American trade with several leading partner countries and regions, and big changes in goods trade with China.

The combined goods and services trade gap narrowed sequentially on month by 9.08 percent, from an upwardly revised $70.64 billion to $64.23 billion. The March total was the lowest since November’s $60.65 billion.

Moreover, the deficit shrank in the best possible way. Total exports rose by 2.12 percent, from a downwardly revised $250.84 billion to $256.15 billion, while total imports dipped (and for the second straight month) by 0.34 percent, from an upgraded $321.48 billion to $320.38 billion. And this trade deficit progress took place when the economy was still growing (albeit at a significantly slowing rate).

And of the $5.31 billion sequential increase in total exports, $4.68 billion (88.14 percent) came in the petroleum products category. In fact, these foreign sales grew at the fastest monthly rate (21.26 percent) since March, 2022 (28.22 percent).

Largely as a result, the goods deficit tumbled in March by 6.92 percent, from $93.03 billion to $86.59 billion – their lowest level since last November, too. ($83.02 billion).

Indeed, petroleum products exports accounted for 89.66 percent of the $5.22 billion expansion of goods exports. On a relative basis, these foreign sales climbed by 3.09 percent, from a downwardly revised $169.09 billion to $174.31 billion.

Goods imports, meanwhile, decreased for the second straight month as well, by 0.47 percent, from a downwardly revised $262.12 billion to $260.90 billion.

The longstanding surplus in services trade slipped in March by 0.11 percent, from a downwardly revised $22.39 billion to $22.37 billion – the lowest level since October’s fractionally higher figure.

Services exports improved by 0.11 percent, from a downwardly revised $81.75 billion to a second straight record of $81.84 billion. The new total topped the old $81.32 billion mark from last December by 0.65 percent.

Services imports, meanwhile, advanced by 0.20 percent, from a downwardly revised $59.36 billion to $59.48 billion – the second highest total ever behind last September’s $59.55 billion.

The huge and longstanding U.S. goods trade deficit with China became a good deal less huge in March, sinking for the second straight month – and by 12.59 percent, fom $19.00 billion to $16.61 billion. Further, that total was the lowest since the $15.76 billion hit in February, 2020 – when China’s economy was still grappling with the devastating first wave of the CCP Virus.

U.S. goods exports to the People’s Republic shot up by 22.06 percent sequentially in March – from $11.62 billion to $14.18 billion. The new total is the highest since last November’s $15.58 billion, and the rate of increase the fastest since last October’s 31.33 percent.

For some perspective, though, this big March increase followed a sizable 11.26 percent decrease in February.

U.S. goods imports from China inched up for the second straight month, but by just 0.55 percent, from $30.62 billion to $30.79 billion. And those two totals are the lowest since early in China’s recovery from that first 2020 virus wave.

Most strikingly, on a year-to-date basis, the U.S. goods deficit with China has cratered by a whopping 39.85 percent, from $101.04 billion to $60.77 billion.

These results, moreover, clash loudly with those of the U.S. worldwide non-oil goods trade – which as known by RealityChek regulars is a close proxy for U.S.-China goods trade.

The U.S. non-oil goods deficit (which can also be considered the “Made in Washington” deficit because it tracks trade flows most strongly influenced by U.S. trade deals and other policy decisions) worsened by 0.19 percent between February and March – from $92.19 billion to $92.36 billion. So China goods trade performed better sequentially on this basis.

U.S. goods exports to China were up in March much faster than the 0.25 percent gain in non-oil goods exports (from $145.80 billion to $146.16 billion).

As for non-oil goods imports, they increased by just 0.23 percent in March (from $237.98 billion to $238.52 billion) – not dramatically different from the China goods performance.

But the year-to-date contrast is enormous. Whereas the U.S. goods deficit with China nosedived by nearly 40 percent, for non-oil goods trade, it fell by less than half that – 17.80 percent, from $336.25 billion to $276.40 billion.

That makes it hard to avoid concluding that the Trump (now Trump-Biden) tariffs keep punishing China (along with Beijing’s own-goals ranging from last year’s wildly over-the-top Zero Covid policies to increasing harassment of U.S.- and other foreign-owned companies) but not simply by diverting imports and trade to other countries and regions. Domestic American producers must be getting some of that old China business as well.

The manufacturing trade deficit, however, worsened by 9.08 percent in March, from $100.05 billion to $109.64 billion. True, this increase followed a 14.36 percent drop in February, but it can’t be good news given the sector’s recent weakness.

Interestingly, this deterioration reflected major changes in both monthly exports and imports. The former soared by 18.91 percent, from $98.06 billion to a new record $116.60 billion (which topped the previous mark of $114.78 billion set last June by 1.58 percent).

Industry’s foreign purchases jumped by 14.20 percent, from $198.10 billion to $226.24 billion.

Big monthly changes and a record were also recorded in Advanced Technology Products (ATP) trade in March. The ATP deficit dropped from $16.23 billion to $14.31 billion. The 11.82 percent narrowing brought the gap to its smallest since February, 2022’s $13.42 billion.

ATP exports shot up from $29.12 billion to a new all-time high $38.33 billion. And the 31.65 percent increase was the most dramatic since March, 2002’s 31.94 percent.

Imports surged, too – by 16.09 percent, from $45.35 billion to $52.65 billion. And that upswing was he fastest since the 33.64 percent burst of last March.

On the regional and bilateral fronts, many of the most dramatic developments came in U.S. goods trade with Europe.

America racked up its biggest exports total ever to the European Union ($34.96 billion – 12.04 percent greater than the $31.20 billion level hit last March) and bought its second greatest total of imports ($50.82 billion, a number trailing only last October’s $53.07 billion).

The volatile U.S. surplus with the Netherlands skyrocketed by 116.40 percent on month, from $1.84 billion to $3.98 billion, keyed by record exports of $7.76 billion. That smashed the previous mark of $6.96 billion by 11.50 percent.

U.S. goods exports to Germany achieved an all-time high, too, with the $7.50 billion figure exceeding the old record of $6.62 billion, set last March, by 13.20 percent.

The U.S. goods deficit with Mexico reached its highest ever, too, in March, with the $13.55 billion total coming in 8.25 percent higher than the old record of $12.57 billion from August, 2020. American goods sales to Mexico totaled $29.27 billion – their second best performance ever after last August’s $29.98 billion. But imports reached a new record of $42.82 billion – 5.87 percent greater than last March’s $40.45 billion mark.

Our So-Called Foreign Policy: Yes, America’s Europe Allies Really are Lagging in Decoupling from China

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allies, Biden administration, China, decoupling, Emanuel Macron, European Union, foreign direct investment FDI, France, investment, Our So-Called Foreign Policy, Trade

Since French President Emanuel Macron’s boot-licking recent trip to China, something of a debate has broken out this past week over whether America’s European allies are moving fast enough to reduce their dependence on commerce with the People’s Republic – or as fast as the United States is. Here’s a claim that they are. And here’s one that they aren’t.

How to know for sure – or with some confidence? Maybe by looking at some numbers? So I did. And the two most important 30,000-foot measures of trade and investment show that the Europeans are lagging significantly – in absolute term and relative to the United States. In fact, both measures indicate that investment in and especially trade with China recently has become more important to the European Union (EU), not less.

The gauges I use are two-way trade as a share of the total U.S. and European Union economies, and direct investment in China as a share of their respective goss domestic products (GDP – the standard measure of an economy’s size). As is often the case, I use the numbers as percentages of their economies because they provide the context that the numbers themselves lack. And this practice is all the more important when trying to figure out matters like dependence or vulnerability.

Let’s start with the European Union’s two-way trade with China and use 2019 as the first year – since that’s the last full year before the arrival of the CCP Virus pandemic, which focused so much attention on over-reliance on China (or any single supplier) for products deemed unusually important. As can be seen, combined exports to and imports from the People’s Republic has grown much faster since 2019 than has the EU economy:

2019: 4.01

2020: 4.39

2021: 4.83

2022: 5.75

In fact, during this period, this trade relative to the EU economy expanded much faster than in the years before 2019. For example, in 2012, two-way Sino-EU goods trade already stood at 3.36 percent of the Union’s output.

(Both sets of figures are in euros before factoring in inflation. The 2012 and 2019-21 figures come from the reliable Statistia.com website here and here. The 2022 trade data come from Statistia. The 2022 GDP figure comes from taking the 2021 Statistia number and adding the 3.6 percent pre-inflation EU growth estimate provided by the Union’s statistical service Eurostat.)

Here’s how America’s annual bilateral goods trade with China as a share of the U.S. economy has changed from 2019 to 2022:

2019: 2.60

2020: 2.65

2021: 2.81

2022: 2.71

These percentages are up some during this period, but by much less than those for the EU. And in 2022, the share went down. Also of note: These numbers are lower in absolute terms than the EU’s. For comparison’s sake, the U.S. figure for 2012 was 3.30 percent. So the importance of China trade to the U.S. economy had been fading steadily before 2019, and has stabilized since. But may be declining once again. So the EU certainly looks like a laggard here.

(These U.S. pre-inflation trade and GDP data come from the standard Commerce Department sources.)

Turning to direct investment flows to China, here are the annual EU results as a percent of economic output:

2019: 0.05

2020: 0.04

2021: 0.03

2022: unavailable

Here, EU relations with China look to be decreasing. But one source pegs the 2021-22 increase at 92.5 percent – a near doubling! Since EU economic growth last year wasn’t remotely that strong, it’s possible that the Union’s businesses have just executed a major turnabout.

(The EU GDP data for 2019-21- this time in pre-inflation U.S. dollars – come from the World Bank. The 2022 figure comes from the St. Louis branch of the Federal Reserve.  The investment figures, also in in pre-inflation U.S. dollars  – including the claim of the big 2022 jump – come from the China-Briefing.com website.)

Their U.S. counterparts?

2019: 0.03

2020: 0.04

2021: 0.01

2022: 0.04

No clear trend here – but no evidence of a big recent pop. So let’s call this a draw at best. And overall edge to the United States.

(The 2019-21 investment and all the GDP data come from the Commerce Department.  The 2022 investment figure can be found in this New York Times piece.

Not that I’m completely thrilled with the U.S. performance. Except for the curbs on exports of goods and investments related to advanced semiconductors, the Biden administration seems wed to the notion that the United States can trim its China economic sails in a piecemeal fashion. But this approach suffers at least two major flaws.

First, as I’ve repeatedly argued, the threat from China is systemic. Therefore addressing product by product or industry by industry is likely to keep Washington straining to keep up with China’s progress.

Second, the piecemeal approach seems to assume that “strategic goods” exist in isolation, even though nearly all manufactured products are only the tip of a (yes, iceberg-like) supply chain.

In other words, if you want to boost America’s health security, you need to make sure that the domestic economy can not only turn out facemasks, but the materials from which they’re made, the machinery needed to manufacture them, and the parts and components of this equipment.

Does this mean that there’s no substitute for aiming to shut down economic relations completely, however gradual this effort may be to proceed? Doubtful, because so many of the goods supplied by China, like apparel and toys, are harmless (although their purchase does increase resources ultimately available to the Chinese regime).

But does it mean that much more energy and thought need to be applied to so-called “decoupling” by both the European Union and the United States? Undoubtedly.

Our So-Called Foreign Policy: The U.S. Keeps Enabling European Free-Riding on Ukraine & Defense Generally

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allies, Biden, burden sharing, defense spending, EU, Europe, European Union, free-riding, Kiel Institute for the World Economy, NATO, North Atlantic treaty Organization, Our So-Called Foreign Policy, Ukraine, Ukraine War

Twenty-three years ago, I published an article (which you can download here) on defense burden-sharing in the America’s premier national security alliance, the North Atlantic Treaty Organization (NATO), titled “Promises, Promises.” I borrowed the title from a 1968 Broadway musical that was ultimately about cynically made pledges because I thought it was perfect for a study that documented how NATO’s European members kept welshing on their vows to raise their defense spending to serious levels – and how the real blame ultimately rested with an overly indulgent United States.

Twenty-three years later, the first major war in Europe since 1945 keeps dragging on, and fresh evidence makes clear (a) that the Europeans (both inside and outside NATO) remain defense deadbeats; and (b) that a prime reason remains their so-far-well-founded confidence that they can rely on the United States to pick up any slack.

Not that no burden-sharing progress has been made at all. As NATO itself just reported, seven members (including the United States) have now met the guideline of spending at least two percent of their national economic output on the military. That’s up from three in 2014.

Just three problems here. First, NATO has thirty members, meaning that the vast majority are still skimping on defense. Second, the two percent guideline was agreed to in 2014. Even had no Ukraine War broken out, that would be a pretty modest move in nine years. With a conflict raging in Europe itself, it’s minimal at best. And in fact, only one NATO country crossed that two percent threshhold since the Russian invasion – Lithuania, which is located awfully close to the war zone.

Third, the NATO guideline is just that – an aspiration, not a hard-and-fast promise, let alone something contained in a legally binding treaty. And reportedly, there’s scant enthusiasm among alliance members for raising it.

Of course, in this Ukraine War era, defense spending isn’t the only contribution that can be made to Europe’s security, and NATO isn’t the only grouping capable of helping out. But the widely followed “Ukraine Support Tracker” compiled by Germany’s Kiel Institute for the World Economy shows that after some brief, belated signs that countries in the European Union (EU – whose members contain both most NATO countries and others on the continent) were collectively stepping up with both military and mainly economic aid for Ukraine, these countries have begun slacking off again in relative terms.

As the Kiel analysts put in their February 21 update:

“Over 2022, the US led the way with major support decisions for Ukraine, with EU countries following with some delay and overtaking the US in the meantime with their total commitments. With additional data now collected (November 21 to January 15), the US again takes the lead.”

The specific numbers? “With additional pledges of nearly 37 billion euros in December, the Americans have earmarked a total of just over 73.1 billion euros for Ukraine support. For the EU, the comparable figure is 54.9 billion euros.”

My “Promises, Promises” article documented in detail that the European NATO members kept free-riding on the United States because Washington repeatedly all but told them that America’s commitment to Europe’s defense would remain unchanged whatever the allies did spending-wise.   

These days, President Biden has also essentially invited the Europeans to free ride by repeatedly declaring that the United States would stand with Ukraine against Russia’s aggression – as he expressed it most recently last month in Poland – “no matter what.”  

Foreign policy realists (a group that should include you as well as me) aren’t mainly bothered by the flagrant unfairness of this situation. As long as it’s tolerated by the United States, free-riding is arguably in the interests of the NATO allies – and ultimately that’s what realists believe foreign policymaking should be all about (though allied leaders might usefully ponder the possible limits of even American patience).     

Instead, the main concern is pragmatic. In the end, allies are worth having only if they can be counted on to join a fight if one breaks out. At the very least, how can any military engage in any useful planning without knowing what forces will be available? Allies like the NATO free-riders, which plainly aren’t ready to make significant sacrifices on behalf of common security during peacetime, seem anything but dependable in the event of hostilities. That’s something Mr. Biden urgently needs to think through before his Ukraine policy creates the acid test.        

(What’s Left of) Our Economy: A Deceptively Calm January for U.S. Trade?

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Advanced Technology Products, ATP, Biden, Buy American, Canada, CCP Virus, China, Donald Trump, European Union, exports, Federal Reserve, goods trade, imports, India, Inflation Reduction Act, infrastructure, Japan, Made in Washington trade flows, manufacturing, monetary policy, non-oil goods trade, semiconductors, services trade, stimulus, Taiwan, tariffs, Trade, trade deficit, Ukraine War, Zero Covid, {What's Left of) Our Economy

Pretty calm on the surface, pretty turbulent underneath. That’s a good way to look at yesterday’s official release of the U.S. trade figures for January. Many of the broadest trade balance figures moved little from their December levels, but the details revealed many multi-month and even multi-year highs, lows, and changes – along with one all-time high (the goods deficit with India).

The combined goods and services deficit most strongly conveyed the impression of relatively calm trade waters. It rose sequentially for the second straight month, but only by 1.61 percent, from a downwardly revised $67.21 billion to $68.29 billion.

The trade shortfall in goods narrowed, but by even less – 0.69 percent, from an upwardly revised $90.71 billion to $90.09 billion.

More volatility was displayed by the services trade surplus. It sank for the first time in two months, from upwardly revised $23.50 billion (its highest monthly total since December, 2019’s $24.56 billion – just before the CCP Virs’ arrival stateside) to $21.80 billion. Moreover, this shrinkage (7.26 percent) was the greatest since last May’s 11.05 percent.

Meanwhile, total U.S. exports in January expanded sequentially for the first time since August. And the the 3.41 percent rise, from a downwardly revised $249.00 billion to $257.50 billion was the biggest since April’s 3.62 percent.

Goods exports in January also registered their first monthly increase since August, with the 6.02 percent improvement (from a downwardly revised $167.69 billion to $177.79 billion) the biggest since October, 2021’s 9.09 percent.

Services exports dipped on month in January, from a downwardly revised $81.32 billion to $79.71 billion. And the 1.98 percent decrease was the biggest since last January’s 3.05 percent. But the December total was the highest on record, and the seventh straight all-time high over the preceding nine months, so January could be a mere bump in the services export recovery road.

On the import side, total U.S. purchases from abroad advanced for the second straight month in January, with the 3.03 percent increase (from a downwardly revised $316.21 billion to $325.79 billion standing as the biggest since last March’s 9.64 percent.

Goods imports were up, too – from a downwardly revised $258.40 billion to $267.88 billion. The climb was the second straight, too, and its 3.67 percent growth rate also the biggest since March (11.00 percent).

Services imports in January were up for the first time since September, but by a mere 0.17 percent, from a downwardly revised $57.81 billlion to $57.91 billion.

Also changing minimally in January – the non-oil goods deficit (which RealityChek regulars know can be considered the Made in Washington trade deficit, since non-oil goods are the trade flows most heavily influenced by U.S. trade agreements and other trade policy decision. The 0.32 percent month-to-month decline brought this trade shortfall from $91.97 billion to $91.68 billion.

Since Made in Washington trade is the closest global proxy to U.S.-China goods trade, comparing trends in the two can indicate the effectiveness of the Trump-Biden China tariffs, which cover hundreds of billions of dollars worth of Chinese products aimed at the U.S. maket.

In January, the huge, longstanding U.S. goods trade gap with China widened by 7.01 percent, from $23.51 billion to $25.16 billion. That third straight increase contrasts sharply with the small dip in the non-oil goods deficit – apparently strengthening the China tariffs critics’ case.

Yet on a January-January basis, the China deficit is down much more (30.82 percent) than its non-oil goods counterpart (14.07 percent). The discrepancy, moreover, looks too great to explain simply by citing China’s insanely over-the-top and economy-crushing Zero Covid policies. So the tariffs look to be significantly curbing U.S. China goods trade, too.

U.S. goods exports to China fell for the third straight month in January – by 5.05 percent, from $13.79 billion to $13.09 billion.

America’s goods imports from China increased in January for the second straight month – by 2.55 percent, from $37.30 billion to $38.25 billion.

Revealingly, however, on that longer-term January-to-January basis, these purchases are off by 20.50 percent (from $47.85 billion). The non-oil goods import figure has actually inched up by just 0.71 percent – which also strengthens the China tariffs case.

The even larger, and also longstanding, manufacturing trade deficit resumed worsened in January, rising for the first time in three months. The 2.83 percent sequential increase brought the figure from $113.61 billion – the lowest figure, though, since last February’s $106.49 billion.

Manufacturing exports declined by 3.01 percent, from $105.71 billion to $102.52 billion – the weakest such performance since last February’s $94.55 billion.

The much greater value of manufacturing imports rose fractionally, from $219.31 billlion to $219.36 billion – also near the lows of the past year.

In advanced technology products (ATP), the trade gap narrowed by 11.36 percent in January, from $18.45 billion to $16.35 billion. The contraction was the third in a row, and pushed this deficit down to its lowest level since last February’s $13.42 billion.

ATP exports were down 8.78 percent, from $35.16 billion to $32.07 billion – their lowest level since last May’s $31.25 billion. And ATP imports sank by 9.68 percent, from $53.60 billion to a $48.42 billion total that was the smallest since last February’s $42.44 billion.

Big January moves took place in U.S. goods trade with major foreign economies, though much of this commerce often varies wildly from month to month.

The goods deficit with Canada, America’s biggest trade partner, jumped by 39.02 percent on month in January, from $5.09 billion to $7.07 billion. The increase was the second straight, the new total the highest since last July’s $8.47 billion, and the growth rate the fastest since last March’s 47.61 percent.

But the goods shortfall with the European Union decreased by 10.83 percent, from $18.36 billion to $16.37 billion. The drop was the third straight, the new total the lowet since last September’s $14.44 billion, and the shrinkage the fastest since last July’s 19.97 percent.

For volatility, it’s tough to beat U.S. goods trade with Switzerland. In January, the deficit plummeted 42.07 percent, from $2.28 billion to $1.32 billion. But that nosedive followed a 77.84 percent surge in December and one of nearly 1,200 percent in November (from a $99.9 million level that was the lowest since May, 2014’s $45.3 million).

Also dramatically up and down have been the goods trade shortfalls with Japan and Taiwan. For the former, the deficit plunged by 30.33 percent in January – from $7.09 billion to $4.94 billion. But that drop followed a 20.58 percent increase in December to the highest level since April, 2019’s $7.35 billion.

The Taiwan goods deficit soared by 52.44 percent in January, from $2.80 billion to $3.68 billion. But this rise followed a 33.65 percent December drop that was the biggest since the 43.18 percent of February, 2020 – when the CCP Virus was shutting down the economy of China, a key link of the supply chains of many of the island’s export-oriented manufacturers.

Finally, the goods deficit with India skyrocketed by 106.55 percent in January, from $2.41 billion to that record $4.99 billion. That total surpassed the $4.44 billion shortfall the United States ran up with India last May, but the more-than-doubling was far from a record growth rate. That was achieved with a 146.76 percent burst in July, 2019.

Since the widely forecast upcoming U.S. recession seems likely to arrive later this year (assuming it arrives at all) than originally forecast, the trade deficit seems likely to continue increasing, too. But that outcome isn’t inevitable, as shown by the deficit’s shrinkage in the second half of last year, when America’s economic growth rebounded from a shallow recession.

The number of major wildcards out there remains sobering, too, ranging from the path of U.S. inflation and consequent Federal Reserve efforts to fight it by cooling off the economy, to levels of net government spending increases (including at state and local levels), to the strength or weakness of the U.S. dollar, to the pace of China’s economic reopening, to the course of the Ukraine War. 

On balance, though, I’ll stick with my deficit-increasing forecast, since (1) I’m still convinced that the approach of the next presidential election cycle will prevent any major Washington actors from taking any steps remotely likely to curb Americans’ borrowing and spending power significantly for very long; and (2) I’m skeptical that even the strong-sounding Buy American measures  instituted by the Biden administration (mainly in recently approved infrastructure programs and semiconductor industry revival plans, and in the green energy subsidies in the Inflation Reduction Act) will enable much more substitution of domestic manufactures for imports – least in the foreseeable future.          

(What’s Left of) Our Economy: 2022 Saw More U.S. Trade Deficits but More Secure Supply Chains

Tags

Advanced Technology Products, ATP, Biden adminstration, Canada, Central America, Dominican Republic, European Union, friendshoring, Germany, Immigration, Japan, manufacturing, Mexico, offshoring, South Korea, supply chains, Taiwan, Trade, Trade Deficits, U.S.-Mexico-Canada Agreement, USMCA, Vietnam, {What's Left of) Our Economy

Sometimes the best-laid plans of mice and men etc etc. So this second look by RealityChek at the final (for now) year-end 2022 official U.S. trade figures is coming out today, rather than yesterday, as I expected.

The big takeaways: First, record deficits were set practically everywhere the eye can see – and on top of sizable increases – when it comes to trade flows in manufacturing, advanced technology products (ATP), and with nearly all of America’s major trade partners (except China, which was covered Friday).

Second, and more encouragingly, regionalization of U.S. trade within the Western Hemisphere kept growing, which is (a) surely making supply chains more secure; and (b) creating more economic opportunity in countries that have long sent the United States large numbers of migrants. In other words, the Biden administration goal of “friendshoring” keeps becoming a thing. 

The biggest absolute numbers were turned in by U.S. manufacturing, which saw its huge, chronic deficit rise by 13.46 percent, from $1.32544 trillion to a twelfth straight record $1.50379 trillion. (Unless otherwise specified, all figures in this post will be in pre-inflation dollars, which are the trade data most closely followed by students of the economy.)

And in context, these figures look just as bad. Although full-year, 2022 results won’t be available until late March, when the pre-inflation manufacturing output numbers come out, as of the third quarter, the manufacturing shortfall stood at 53.09 percent of its value-added production (a measure that avoids significant double counting for complex goods made up of lots of parts and components). That marks the first time this number has topped fifty percent.

Moreover, it could well climb further, since in inflation-adjusted terms, manufacturing output has weakened significantly in the fourth quarter.

The only remotely optimistic development: The growth rate of the manufacturing trade deficit last year slowed from 2021’s 18.84 percent.

The trade gap in advanced technology products widened even faster last year – by 24.58 percent, from $195.95 billion to a sixth consecutive all-time high $244.11 billion.

An even stronger goods trade deficit increase was registered by America’s partners in the United States-Mexico-Canada Agreement (USMCA) – the successor to the North American Free Trade Agreement (NAFTA). This shortfall worsened by 34.12 percent, from $158.19 billion to a second straight record .$212.17 billion.

The most dramatic USMCA deficit change came in U.S-Canada goods trade. Here, the gap soared by 63.14 percent, from $50.03 billion to $81.62 billion. That new record deficit was the highest since 2005’s $78.49 billion..

The goods trade deficit with Mexico surged more slowly – by 20.73 percent. But 2022’s $130.55 billion total was a new all-time high as well, surpassing 2020’s $112.08 billion.

American trade with the European Union (EU) was an exception to the 2022 pattern. The goods shortfall fell by 6.78 percent, from $218.74 billion to $203.91 billion, largely reflecting supercharged American exports of natural gas to the continent to make up for reduced post-Ukraine war Russian supplies.

But the goods deficit with the EU’s largest economy, Germany, increased by 5.44 percent, from $69.88 billion to $73.69 billion.

Turning to U.S. goods trade with Asia, the deficit with Japan grew by 12.80 percent on year, from $60.30 billion to $68.01 billion.

The gap with South Korea jumped by 51.39 percent, from $28.98 billion to a third straight record $43.87 billion.

In swelling by 19.65 percent, from $40.23 billion to $48.13 billion, the goods shortfall with Taiwan set recorded its fourth consecutive all-time high.

And consistent with its growing role as an alternative to offshoring export-oriented production to China, the U.S. goods deficit with Vietnam ballooned by 27.77 percent, setting a thirteenth straight record in the process.

At the same time, these geographic trade statistics show that despite the emergence of Asia altenatives to China, U.S. goods trade is becoming increasingly concentrated within the Western Hemisphere.

Between 2021 and 2022, two-way U.S. goods trade with Canada and Mexico combined as a share of total U.S. goods trade rose from 28.76 percent to 29.33 percent. And in 2019, the last full-year before the pandemic’s arrival state-side, this share was just 25.71 percent.

The numbers for Dominican Republic and Central America are much smaller but the trends more dramatic. Between 2021 and 2022, their share of total U.S. goods trade improved from 5.25 percent to 5.34 percent, but since 2019, it’s way up from 1.23 percent.   

 

(What’s Left of) Our Economy: A Terrible March for U.S. Trade – With Worse Likely to Come

Tags

Advanced Technology Products, Canada, China, currency, dollar, European Union, exchange rates, exports, Federal Reserve, goods trade, imports, inflation, Japan, Made in Washington trade deficit, manufacturing, Mexico, oil, services trade, Trade, trade deficit, {What's Left of) Our Economy

So many records (mainly the wrong kind) were revealed in the latest official monthly U.S. trade figures (for March) that it’s hard to know where to begin. Some important points need to be made before delving into them, though.

First, don’t blame oil. Sure, this trade report broke new ground in containing a full month’s worth of Ukraine war-period data. But despite the disruption in global energy markets triggered by the conflict, on a monthly basis, the U.S. petroleum balance actually improved sequentially, from a $2.94 billion deficit to a $1.58 billion surplus on a pre-inflation basis (the trade flow gauges from these monthly government releases that are most widely followed)

And even on an inflation-adjusted basis, February’s $8.73 billion oil deficit shrank to $5.15 billion in March.

Second, don’t blame inflation much at all. The Census Bureau doesn’t report after-inflation service trade results on a monthly basis, but it does provide this information for goods (which comprise the great majority of U.S. trade flows). And the March figures show that before factoring in inflation, the goods trade deficit worsened by 18.89 percent from $107.78 billon in February to a new record $128.14 billlion, whereas when inflation is counted, this gap widened on month by 18.86 percent, from $115.96 billion in February to $137.83 billion in March. (Major trade wonks will note that these goods and services data are presented according to two different counting methods, but trust me: the difference in results is negligible.)

Third, don’t blame China. The March pre-inflation goods deficit with the People’s Republic was up sequentially from $42.26 billion to $47.37 billion (12.10 percent). But neither that absolute level nor the rate of increase was anything out of the ordinary, much less a record. In fact, the monthly percentage increase was just half the rate of that of the shortfall for total non-oil goods (a close worldwide proxy for China goods trade) – which hit 24.06 percent. One big takeaway here: the Trump China tariffs are still exerting a major effect, along of course with the supply chain knots Beijing has created with its over-the-top Zero Covid policy.

But regardless of where the blame lies, (and it looks like major culprits are continued strong U.S. spending on both consumer goods and capital equipment, combined with an improvement of the supply chain situation outside China), all-time highs and worsts abounded in the March trade report, include worsenings at record paces.

The combined goods and services trade deficit jumped on-month by 22.28 percent, to $109.80 billion. That total was the third straight record for a single month and the increase the fastest since the 43.71 percent explosion in March, 2015 – a month during which much of the country was recovering from severe winter weather.

As mentioned above, the $128.14 billion goods trade gap was the highest ever, too, topping its predecessor (January’s $108.60 billion) by 17.99 percent. As for the 18.89 percent monthly increase, that was also the biggest since March, 2015 (25.18 percent).

Even a seeming trade balance bright spot turns out to be pretty dim. The headline number shows the service trade surplus improving by 1.96 percent – from $17.98 billion to $18.34 billion. Unfortunately, nearly all of this increase stemmed from a big downward revision in the initially reported February surplus, from $18.29 billion.

As known by RealityChek regulars, the aforementioned non-oil goods trade deficit can also be called the Made in Washington trade deficit – because by stripping out figures for oil (which trade diplomacy usually ignores) and services (where liberalization efforts have barely begun), it stems from those U.S. trade flows that have been heavily influenced by trade policy decisions.

And not only was the March Made in Washington deficit’s monthly increase of 24.06 percent the second fastest ever (after March, 2015’s 31.24 percent). The March, 2022 level of $128.70 billion was the biggest ever.

The story of the non-oil goods trade gap’s growth was overwhelmingly a manufacturing story. The sector’s huge and chronic trade shortfall shot back up from $106.49 billion in February (which was a nice retreat from January’s $121.03 billion) to a new record $142.22 billion. And the monthly percentage jump of 33.55 percent was the biggest since the 37.62 percent during weather-affected March, 2015.

Manufactures exports advanced sequentially by a strong 20.53 percent this past March. That topped the previous all-time monthly high of $105.37 billion (set back in October, 2014), by 8.15 percent. But the much greater volume of imports skyrocketed by 27.43 percent. And their $256.18 billion total smashed the old record of $222.79 billion (from last December) by 14.98 percent.

Within manufacturing, U.S. trade in advanced technology products (ATP) took a notable beating in March, too. The $23.31 billion trade gap was an all-time high, and its 73.65 percent monthly growth the worst since the shortfall slightly more than doubled on month in March, 2020 – as the Chinese economy and its huge electronics and infotech hardware manufacturing bases reopened after the People’s Republic’s initial pandemic wave.

Yet as noted above, despite these extaordinary manufacturing and ATP trade numbers, the latest March numbers for manufacturing-heavy U.S. China trade were anything but extraordinary. U.S. goods exports to the People’s Republic increased on-month by 15.36 percent – slower than the rate for manufactures exports globally, but the fastest rate since the 52.47 percent rocket ride they took  last October.

Goods imports from China, however, rose much more slowly from February to March than manufactures imports overall – by just 12.10 percent, from $42.26 billion to $47.37 billion.

When it comes to other major U.S. trade partners, the March American goods deficit with Canada of $8.03 billion was the highest such total since July, 2008 ($9.88 billion). It was led by a 30.81 percent advance in imports reflecting the mid-February reopening of bridges between the two countries that had been closed due to CCP Virus restrictions-related protests.

The goods deficit with Mexico worsened even faster – by 35.11 percent, to $11.92 billion. That total was its highest since August, 2020’s $12.77 billion.

Another major monthly increase (31.59 percent) was registered by the U.S. goods shortfall with the European Union, but its March level ($16.87 billion) was subdued relative to recent results.

Anything but subdued was the Japan goods shortfall, which shot up sequentially in March by 49 percent. The $6.77 billion total also was the biggest since November, 2020’s $6.78 billion, and the monthly jump the greatest since the 84.37 percent burst in July, 2020, during the rapid recovery from the sharp U.S. economic downturn induced by the first wave of the CCP Virus and related economic and behavior curbs.

The Europe and Japan trade figures stem significantly from a development that’s bound to turn into an increasingly formidable headwind for the U.S. trade balance for the foreseeable future – the dollar’s rise versus other leading currencies to levels not seen in 20 years. And unless it’s reversed substantially soon, China’s latest currency devaluation, which began in mid-April, will weaken the effects of both the Trump tariffs and the Zero Covid policy. So even if the Federal Reserve’s (so far modest) inflation-fighting efforts do slow the American economy significantly, it’s likely that, as astronomical as the March trade deficits were, we ain’t seen nothin’ yet.

Our So-Called Foreign Policy: Glimmers of Hope on Ukraine?

Tags

Biden, Blob, chemical weapons, cyber-war, David Ignatius, Donbas, EU, European Union, NATO, North Atlantic treaty Organization, nuclear war, Our So-Called Foreign Policy, Russia, Ukraine, Ukraine-Russia war, Vladimir Putin, Volodymyr Zelensky

As known by long-time readers of RealityChek (see, e.g., here and here), I’m no fan of David Ignatius. Literally for decades, the Washington Post pundit has veritably personified the Blob – that mainly New York City- and really mainly Washington, D.C.-based mutually reenforcing network of current political leaders and senior bureaucrats, Congressional staff, former officials, other hangers-on of various kinds, consultants, think tankers, academics, and journalists who have long championed globalist U.S. foreign policies despite the needless national security and economic damage they’ve caused.

Not so incidentally, they keep moving in an out of public service so continuously that they’ve not only blurred the crucial lines between these spheres, but they’ve more than earned the term “permanent (and of course unelected) government.”

So imagine my surprise when I opened my Washington Post Thursday morning and discovered that Ignatius had written what may be the most important American commentary yet on the Ukraine War. His main argument is that President Biden and Russian dictator Vladimir Putin have each decided on a set of goals that could reduce the chances of the conflict spilling across Ukraine’s borders, and especially into the territory of neighbors that enjoy a strong U.S. defense guarantee. This chain of events could all-too-easily lead to direct U.S.-Russia military conflict that could just as easily escalate to the all-out nuclear war level.

But the goals identified by Ignatius are encouraging because they indicate that both Mr. Biden and Putin have retreated from dangerously ambitious objectives they’ve referred to throughout the war and its prelude. For the U.S. President, this means a climb-down from his administation’s declarations that Russia can’t be allowed to establish anything close to a sphere of influence that includes Ukraine, and that would prevent it and potentially any country in Eastern Europe from setting its own defense and foreign economic policies.

For Putin, this means confining his aims to controlling the eastern Ukraine provinces with large Russian-speaking populations, not the entire country

Ignatius’ most convincing evidence regarding the American position is Mr. Biden’s statement on Thursday that with its growing military support for Ukraine, the entire western alliance was  “sending an unmistakable message to Putin: He will never succeed in dominating and occupying all of Ukraine. He will not — that will not happen.” As Ignatius pointed out, this statement, “though resolute in tone, left open the possibility that Putin might occupy some of Ukraine, in the southeastern region where Russian attacks are now concentrated.”

Moreover, this Ignatius observation matters considerably in large measure precisely because the author is so well plugged in to the staunchly globalist Biden administration. If he’s putting points like this in print, the odds are good that it’s because he’s heard them from genuinely reliable sources, and even because those sources are using him as a vehicle for trial balloon floating.

Ignatius’ most convincing evidence regarding the Kremlin’s position is Putin’s statement the same day that the Russian forces that have virtually destroyed the southern Ukrainian city of Mariupol have “sacrificed their lives so that our people in Donbas [the aforementioned eastern Ukraine region] live in peace and to enable Russia, our country, to live in peace.”

Those last words in particular suggest that Putin now believes a Russia-dominated Donbas can serve as an acceptable buffer between Russian territory and the North Atlantic Treaty Organization (NATO) that expanded its membership in the 1990s and early 2000s to countries directly bordering Russia.

On this issue, though, big questions remain: Would Putin permit what’s left of Ukraine join NATO (in which President Volodymyr Zelensky has said he no longer interested) or the European Union (which Ukraine still wants)? Or would Moscow let a rump Ukraine do what it wished on these defense and economic fronts? At the same time, the very uncertainty created by these Russian and Ukrainian (and now U.S.) statements makes clear there’s a deal that can be struck before Ukraine experiences much more suffering.

But as Ignatius himself notes, this week’s Biden and Putin positions are anything but guarantees against disastrous escalation. The reason? As I’ve written, the longer the fighting lasts and especially the more intense it becomes, the likelier spillover gets – whether from air raids to artillery strikes to the spread of toxic clouds from exploded chemical or even nuclear weapons, to cyber attacks (e.g., by Russia against U.S. or other western computer systems intended to interfere with the Ukraine weapons supply effort or with the West’s intelligence sharing with Kyiv).

So the Biden and Putin statements may be necessary developments for securing a non-disastrous end to the Ukraine war, but they’re hardly sufficient. Some serious form of outside pressure looks to be essential — either President Biden on Zelensky, or (seemingly less likely) China on Putin. Without it, Americans — and Ukrainians — arguably are left with hoping for the best, a strategy with an historically unimpressive record of success.        

Our So-Called Foreign Policy: U.S. Allies are Standing (A Tiny Bit) with Ukraine

Tags

alliances, allies, burden sharing, EU, Europe, European Union, free-riding, Kiel Institute for the World Economy, North Atlantic treaty Organization, Our So-Called Foreign Policy, Russia, Ukraine, Ukraine-Russia war

Even a long-standing critic like me of the record of U.S. allies in Europe in sharing the burden of their own defense found the graphic below to be quite the stunner. It makes clear that, so far, countries that for decades have been deadbeats and free-riders when it comes to fielding armed forces capable of defeating first Soviet and then post-Soviet Russian aggression, are behaving just as selfishly and miserly in supporting Ukraine’s resistance to the Kremlin’s invasion – and presumably keeping themselves safe from attack or bullying by Moscow.

The graphic comes from a leading German think tank – the Kiel Institute for the World Economy – and it shows that between the February 24 start of the invasion of Ukaine through March 27, the United States, in the words of the Institute’s research director, “is giving significantly more than the entire [European Union], in whose immediate neighborhood the war is raging.”

The specific amounts of combined financial, humanitarian, and military assistance (in euros) , according to Kiel: the United States, 7.6 billion; all European Union countries combined, 2.9 billion; EU institutions (like the European Investment Bank, 3.4 billion. Adding the United Kingdom (not an EU member) increases the European total by $712 million euros – and would still leave this figure below that of U.S. aid in all forms.

True to RealityChek‘s long-time insistence that data be presented in context, the Europeans come off somewhat better when these aid figures are presented as percentages of total economic output. After all, it’s completely unrealistic to expect even the most vigilant very small economy to donate as much in absolute terms as a much larger economy, all else equal.

But as the Kiel graph beow shows, most of the Europeans don’t come off that much better.

In fact, except for Estonia, Poland, Lithuania, Slovakia, and Sweden, the United States holds the lead according to this measure, too. And remember: Poland and Slovakia are right next door to Ukraine, Estonia and Lithuania border Russia, and Sweden is located just across the Baltic Sea to them. As for the rest of Europe, I’ll just circle back to the point made by the Kiel Institute research director: It’s their “immediate neighborhood”! So their relative efforts should be exponentially greater than America’s, as should those of the countries even closer to the fighting.

Moreover, it’s easy to understand why European military aid has been so modest. These countries have been skimping on their militaries for decades. But as a result, they should be compensating by providing much greater amounts of economic and humanitarian assistance.

These figures are damning enough as examples of continued European fecklessness. But they’re even more important because the continent’s free-riding means that for the foreseeable future, American military forces will keep playing a predominant role in any response to the Ukraine invasion. And even if President Biden sticks with his pledge to keep U.S. troops out of the fighting in Ukraine, their very presence in the vicinity of a conflict could expose the U.S. homeland literally to mortal danger. 

For as I’ve noted, if the war spills over borders into the countries where the American units are based, and that enjoy a legally ironclad promise of protection by the United States and the rest of the North Atlantic Treaty Organization (NATO), U.S. and Russian forces will almost surely wind up shooting at each other, and the prospect of escalation to the all-out nuclear war level becomes terrifyingly real. 

A Europe willing and therefore at some point able to defend itself would reduce this danger to acceptable levels. But as the Kiel data show, because the Europeans remain protectorates much more than genuine allies, this point looks as far off in the future as ever.                     

 

 

(What’s Left of) Our Economy: Encouraging Brexit Lessons for the United States

Tags

Brexit, China, decoupling, European Union, Eurozone, Financial Times, France, Germany, IMF, International Monetary Fund, United Kingdom, {What's Left of) Our Economy

Some awfully interesting evidence supporting my view (see, e.g., here) that the United States is uniquely positioned in the world to prosper quite nicely from seeking to maximize its already high degree of economic self-sufficiency has just emerged — and from some awfully unlikely sources.

It’s indirect evidence, to be sure, and concerns the United Kingdom’s (UK) economic perfomance since the Brexit referendum of 2016 that mandated its pull-out from the European Union. But it’s relevant to the United States’ situation because the U.S. economy is far more actually and potentially self-sufficient.

The evidence – from the ardently globalist International Monetary Fund (IMF) and from the just-as-ardently anti-Brexit Financial Times – makes clear that since the UK finally left the EU at the end of January, 2020, it’s gross domestic product (GDP – the standard measure of a national economy’s size), has not only risen about as fast as those of the major members of the EU, but that it’s closed the gap that existed pre-withdrawal. And all the while, the UK has reaped a crucial benefit – much more control over its future.

The IMF evidence came in today’s release of its World Economic Outlook – a twice yearly Fund publication that surveys the state of the globe and includes growth forecasts for major countries, geographic regions, and formal groupings of countries like the eurozone (which overlaps pretty thoroughly with the EU).

According to the Fund, last year, the UK economy expanded by 7.4 percent in inflation-adjusted terms (the most closely monitored gauge of growth). The figure for the countries using the euro as their currency? A mere 5.4 percent. And it’s not like the lagging eurozone performance was dragged down by its long-time economic laggards. Germany’s real 2021 growth was a measly 2.8 percent, and France’s much better seven percent still trailed the UK’s.

In other words, a single country that’s cut itself off from all the alleged benefits of economic integration with a much larger market had out-grown the collective members of that market that presumably were enjoying all the economic advantages of such integration.

Moreover, the IMF’s latest projection for this year crowns the UK as a growth winner, too. Its 2022 price-adjusted GDP is forecast to improve by 3.7 percent, versus 2.8 percent for the euro area. The French after-inflation growth rate is expected to top the UK’s slightly (2.9 percent), but Germany’s will be stuck at a lowly 2.1 percent.

The only solace Brexit-haters can take from the IMF analysis is that the UK supposedly will fall way behind growth-wise next year. Its real GDP performance is pegged at a mere 1.2 percent – slower than that of the euro area (2.3 percent), France (a not-so-impressive 1.4 percent), and Germany (a respectable 2.7 percent, but a performance coming off an unusually low baseline). Yet needless to say, it’s much more reasonable to put more stock in near-term predictions and longer-term predictions.

In addition, even with this possible slowdown, the Financial Times graph below (taken from this article) shows that, despite its glass-half-empty title, if the IMF is right about 2022, the UK will have turned itself from a growth laggard in 2019 compared with France and Germany to a growth equal. And although the 2023 projections are tough to see in this graphic, they show near parity among the three.

Two qualifications to these findings need to be made. First, as I’ve repeatedly noted, all economic data for the last few years has been dramatically affected and surely distorted by the CCP Virus pandemic. Second, although the UK left the EU, it still does business with the bloc and its economic ties with the rest of the world stayed the same organizationally.

At the same time, for years after the referendum vote, businesses in the UK had been dealing with major uncertainties and the inevitable short-term costs of the negotiations over Brexit’s precise withdrawal procedures and terms. And the growth figures make obvious that, on the whole, they and the entire economy have managed to navigate them successfully.

And if the UK has so far emerged successfully from its Brexit-style decoupling from the EU, it’s hard to imagine that the much more economically diverse United States can’t emerge from a much more determined decoupling from China – which will promote vital and intertwined economic and national security interests – at least as well.