Germany is the global leader in exports as a percentage of GDP. It stands to lose the most in a global trade war.

Germany Exports as Percentage of GDP

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Eurozone Exports as Percentage of GDP

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UK Exports as Percentage of GDP

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China Exports as Percentage of GDP

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US Exports as Percentage of GDP

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Assuming a uniform 10% collapse in global trade, here are the GDP impacts.

Percentage Point Hits to GDP

  1. Germany: 4.724 PP
  2. Eurozone: 4.408 PP
  3. UK: 2.826 PP
  4. China: 1.964 PP
  5. US: 1.189 PP

Pain Order

The hits would not be uniform, of course, and a 10% decline may be far too much.

However, the pain order is correct.

Pain Tolerance

Pain tolerance is important.

The US' biggest trade deficit is with China and China has the biggest pain tolerance.

The US has the least pain tolerance with elections every four years and one coming up in 2020.

Losing Less is not Winning

Losing less is not winning.

No one wins trade wars.

This is not 1960

Finally, this is not 1940, 1950, or even 1970.

Contrary to Trump's touting, the battle isn't about NAFTA or the WTO.

Unwinnable Trade War

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China's inclusion into the WTO exacerbated the trade problems but did not cause them.

The roots of this crisis stem from Nixon closing the gold window in 1971.

Even if the US had a higher pain tolerance, the US cannot possibly win a trade war.

For discussion, please see Trump's Unwinnable Trade War: Gold Explains Why

Mike "Mish" Shedlock