The US is the world's largest domestic economy. Trade with all nations around the world is 24% of the USA's GDP. You could shut it all down and the country would probably enter a mild recession while the rest of the world would face complete economic collapse. For example, 67% of Canada's GDP is reliant on the United States in some way.
The US has an insane amount of leverage. Leaders in Canada, Europe, etc talk a big game but then ultimately talk to an economist and realize they have to come to the table. That's why these leaders keep announcing things and then walking them back.
Also, according to Peter Zeihan (I know) a significant part of that trade consists of the US's exporting the light sweet crude oil produced by fracking, which is easy to refine, and importing heavy sour crude oil, which the US has a comparative advantage in refining. Clearly, the US could switch to refining the crude oil produced in the US with very little disruption.
How does this account for the different classes of things that go into a GDP?
The US imports a lot of goods because we can't or don't want to make them here. Meanwhile, the bulk of US GDP is services done by knowledge workers...
I am certainly not an economist but it seems like it would be a hell of a lot harder for the United States to build a bunch of factories and learn how to run them compared to the effort other countries would have to go through to import knowledge workers to build their own local services.
24% of US GDP divided by US GDP is a larger number than 24% of US GDP divided by non-US GDP. Any changes to US foreign trade affect the US more than the rest of the world.
When we start talking about 24% of the GDP we gotta go more specific into what industries depend on to understand the impact. Agricultural industry as a whole (imports, local production, etc.) represents much less than 24% of USA's GDP but if it disappeared it would be cataclysmic for the nation.
And 24% of GDP is a whole fucking quarter of the whole economic production of the largest economy in the world, it's not a "mild recession"...
The current situation is the result of decades of free trade and reliability.
There will likely be a shift if the market forces pull in a different direction.
Not today right away but in the timescale of years.
GDP fell 29% during the Great Depression. 80% of the way to the Great Depression is not a "mild" recession!
I agree that it would be less severe for the US than for other countries. It's essentially saying, economically, "Do what I want or I'll kill you." It's a mafia-style negotiation. I despise it when others do it, and I despise that the US is doing it.
I don't understand this argument. Every negotiation between countries should end in "do what I want or I'll kill you". Yes, executing those threats is only possible if the country threatening destroys itself in the process, but countries certainly can destroy almost anyone they're negotiating with if they disregard the cost to their own citizens.
Now what has kept Europe stable was the US having a bigger economy, good intentions (as in the intention was to increase ALL trade, not just US' immediate advantage), an unbeatable army and a nuclear armed threat to fight. Perhaps ironically, this approach made the US the most powerful country in the world, when countries that directly pursued their own interests faded, or outright failed (most famously USSR).
This appears to be ending. And every country has politicians just salivating to do what Trump is (or appears to be) doing: getting themselves what they want at any cost to their own country's citizens. Sooner or later they'll come to power and ...
So how do you negotiate as a country, really? If the country you're negotiating isn't a psychotic aggressor at the moment ... the time will come when they are. Doesn't this make war the inevitable outcome?
"Do something or we'll trade with somebody else" is not a credible threat if they know you've already pissed off everybody else.