The past 8 years have witnessed a reversal in American trade policy stance—away from fealty to multilateral trade rules and an embrace of openness towards a turn inward. Communication styles of the Biden and Trump teams differ but, broadly speaking, Biden continued many of Trump’s salient import restrictions.

American presidential elections are not known for advancing the cause of open trade and investment. This year was no exception. One candidate advocated 60% import tariffs on goods made in China and 10%-20% across-the-board duties on imports from everywhere else. His opponent labelled these proposals a “sales tax,” but that may have been driven more by the desire to deflect attention from the Biden Administration’s poor track record on inflation. During the campaign, the Biden Administration imposed sharp import tariff increases on electorally-sensitive products and discouraged the takeover of U.S. Steel by Nippon Steel (a foreign firm based in an ally, Japan). Observers were left in no doubt that both candidates would take whatever measures were needed to prop up the under-performing elements of the American manufacturing sector—a consequence of many “Rust belt” states being electoral “swing states.”

Before the next US Administration takes office, America’s trading partners would be advised to consider how much access to the US market matters in practice. What is their export exposure should the United States turn further inward? Such assessments should consider the option of selling more to other countries. After all, the American share of world imports has fallen this century from 19.6% in 2000 to 13.5% today. This means that for decades export opportunities outside the United States have grown faster than world goods trade. An extensive table at the end of this briefing provides estimates on the export exposure of 187 of America’s trading partners.

Exposure analysis

The goal here is not to predict how restrictive the next US Administration’s policy towards imports will be. Nor is it to quantify the impact of any new American trade barriers. Rather, it is to put numbers on the exposure of trading partners to the loss of access to the United States market. To fix ideas, the focus here is on the worst-case scenario: where access to the American market is lost entirely for each trading partner, including those with regional trade agreements with the United States. Hopefully this worst-case won’t come about—but the findings reported below are revealing and may offer some comfort to many foreign governments. Given that international trade data on services is so patchy, only foreign goods trade is considered. A trading partner is less vulnerable to loss of access to the US market when:

1. A smaller share of its total exports is shipped to the United States.

2. Aggregate exports play a smaller role in its GDP.

3. Exports to destinations other than the United States are growing faster.

The first factor reflects the degree to which a trading partner’s exports are concentrated in the United States. The second factor reflects the overall export dependence of a trading partner. The third factor speaks to the track record in winning export orders in third markets and, therefore, to the trading partner’s potential for re-directing products previously destined to the United States.

Using international trade data from the UN COMTRADE database and GDP data from the World Bank’s World Development Indicators database, the rest of this briefing examines these three elements. The goal is to put numbers on each of them so as to allow policymakers and analysts to scale what is at stake if American trade isolationism is pushed to the limit. 

Export concentration and dependence

The latest year for which a full set of international trade data is available in the UN COMTRADE database is 2022. For that year, a trading partner’s export concentration was calculated as the share of total national goods exports destined for the United States. Moreover, export dependence was calculated as the share of national GDP in 2022
accounted for by national goods exports.

Only Cambodia and Nicaragua lie inside the red zone, indicating the greatest exposure. For sure, Mexico is on the boundary. However, more nations are in the yellow zone—which implies they have relatively high levels of export concentration or export dependence but not both. Canada and Mexico have lower levels of export dependence than Thailand and Viet Nam but the exports of the former two are more heavily concentrated in the United States market. These findings are a reminder that, as far national economic exposure is concerned, exports are not the only source of demand for products.

Only 17 of the 187 economies considered here lie inside the yellow or red zones in Figure 1. Interestingly, trading behemoths such as China, Germany, and Japan do not lie inside either zone. Nor does the Republic of Korea for that matter. Attention now turns to the third factor—re-directing exports to third markets.

Track record of exporting to alternative markets

Rather than speculate as to capacity of a nation to re-direct lost US exports to third markets, the track record of each economy in winning export orders is considered. To assess the growth in non-US sales of an economies’ products, the annual cumulative growth rate of total non-US goods imports between 2012 and 2022 was calculated. Forty- three economies saw the nominal value of their non-US goods exports fall between 2012 and 2022 and for them there must be doubts as to whether, without additional measures being taken, lost US export sales could be profitably re-directed to third markets.

In the 144 economies that saw non-US imports grow from 2012 to 2022, it was possible to calculate the number of years it would take for non-US imports to grow so as to fully compensate for loss in US market access. For the sake of argument assume that the US market is entirely closed to imports at the start of 2025. For each of these 144 trading partners, it is possible to calculate in which year the growth in non-US imports would have compensated entirely for the loss of US market access in 2025.

Nine nations are in the red/danger zone: Cambodia, Canada, Costa Rica, Honduras, Ireland, Lesotho, Mexico, Thailand, and Trinidad and Tobago. A further 10 nations are in the yellow zone: Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Jordan, Republic of Korea, and Switzerland. On the third metric then, these nations have the most to worry about if American market access is lost. The other 126 economies that expanded their non-US exports from 2012 to 2022 have less reason for concern: either their non-US exports are growing fast enough to quickly replace lost US exports, or their export dependence on the US market was small in the first place.

On the assumption that the US market is closed in 2025, that figure reports the number of economies whose non-US exports would have grown enough to replace the lost US sales by the end of each subsequent year.

By the end of 2025, 69 economies will have crossed that threshold—essentially replacing lost US sales with organic export growth elsewhere. A further 14 economies would reach that threshold by the end of 2026 and a further 9 economies by the end of 2027. Within 5 years of loss of US market access (2030), a total of 114 economies would have replaced all their lost US export sales. These findings do not imply that extreme US trade isolationism is unimportant—disruption is almost certain. However, for many economies these export losses would be readily absorbed through organic export growth in third markets.

[Regarding] which year total exports are made whole for the G20 trading partners of the United States, Australia’s exports would recover fastest—followed by China, which would see full recovery before the end of 2027. India and Germany would have to wait five years for full export recovery.

British and French exports to third markets have grown so slowly over the past decade (around 1% per annum from 2012 to 2022) that their full recovery would take place in 12 years, in 2037. The root causes of slow export growth to third markets merits further investigation as it influences the capacity to absorb closure of the US market. This observation applies not only to Britain and France but also to the 43 economies that did not enjoy export growth outside the US market in the decade from 2012 to 2022.

Other considerations to bear in mind

One concern with this analysis is that it only considers direct export exposure to the United States. What about those exports to Mexico that are used to make products for sale in the United States? Shouldn’t this be taken into account? Other than the United States, 8 nations exported more than $10 billion to Mexico in 2022 (Brazil, Canada, China, Germany, Japan, Malaysia, Republic of Korea, and Viet Nam.) China stands out in this regard—exporting a total of $118 billion to Mexico in 2022.

Let’s assume that all these exports to Mexico would also be lost if the US closes its market to foreign goods. Not every export to Mexico is used to produce goods for sale in the United States, so the results that follow will over-estimate the adjustment time needed. Table 1 reports the number of additional years of non-US export growth needed to replace the lost Mexican market access as well. Japan is excluded from this calculation as it is one of the economies where non-US exports did not grow from 2012 to 2022.

Based on 2022 trade flows, it would take between 0.3 to 2.2 years longer for these nations to recover their lost exports to Mexico as well. Viet Nam would need less than 4 months to make whole any lost Mexican exports. China would need just over 6 months to do so and Canada 15 months. At the upper end, in less than 27 months full recovery for the Republic of Korea would be achieved should organic growth to non-US markets continue at the same pace. Again, while a commercial blow of this nature is not to be trivialised, the inclusion of Mexico in the calculations does not materially affect the qualitative findings reported earlier […].

No doubt some will point out that exposure is not the same as effect. They might prefer to estimate or simulate the effects of full US market closure. Such calculations would be welcome but they come at a cost that should be recognised. The economic models available to conduct such empirical analysis lump together many developing economies into large groups. Therefore, those models cannot provide the type of granular evidence found in the Annex Table of this Briefing.

A third worry relates to the assumptions underlying the policy scenario explored here. Extreme US trade policy isolationism may trigger retaliation by other governments. Under these circumstances the rate of growth of non-US exports witnessed during 2012 to 2022 may overstate the likely growth rate should America’s trading partners close their markets too.

Retaliation is likely to extend the time to full export recovery. But a countervailing factor is sustained decline in US competitiveness. If that decline continues (indeed, if exacerbated by further turns inward), then trading partners may experience faster growth in non-US markets than that witnessed from 2012 to 2022.

Bear in mind that the US share of world exports has fallen from 12.5% in 2000 to 8.8% in 2023. Moreover, the only remaining international competitiveness ranking reports that the United States was ranked 1st in 2015, 3rd in 2016 (the last ranking before the end of the Obama Administration), 10th in 2020 (the last ranking issued before the end of the Trump Administration) and 12th in 2024. This loss of ground surely translates into weaker US export performance and, correspondingly, into commercial opportunities for trading partners. Taking proper account of declining US competitiveness implies that the years-to-recovery estimates presented here may be too pessimistic.

A final consideration is that US trade isolationism would not be confined to closing its markets. There would be implications for the standing of the World Trade Organization, not least if the United States were to formally renounce its membership as well. It is difficult to see a silver lining in such a scenario.

Concluding remarks

The United States shepherded the world trading system after the Second World War. However, over the past 8 years, during Administrations of both parties, it has turned inward. The recent US presidential election confirmed little appetite from either party for meaningful, constructive engagement with foreign governments on international trade and investment policy. Whoever wins this election, the prognosis is for a further inward turn—and the trading partners of the United States should prepare accordingly.

Trading partners would be advised to assess their exposure to abrupt moves to end access to the United States market. The evidence presented in this briefing may be useful in this regard. While such abrupt moves would be unwelcome and possibly devastating for the standing of the current corpus of international trade rules, for many trading partners the lost exports would be recovered quickly with additional sales in third markets.

Having written that, there are some trading partners of the United States that would face major economic dislocation following denial of market access. The US trading partners at greatest risk go beyond Canada and Mexico, as the evidence in this briefing shows.

Cushioning the blow from America’s turn further inward provides another reason for governments to review their private sector development policies with an eye to enhancing international competitiveness. The temptation to resort to quick fixes (typically in the form of beggar-thy-neighbour subsidies) and to retaliation against any American moves should be resisted. The best insurance against rogue United States trade policy is an efficient, innovative and nimble private sector capable of securing new foreign customers.

Its declining competitiveness ranking and falling share of world exports are manifestations of the secular economic decline of the United States. Regrettable as that decline is, these same factors ease the adjustment of America’s trading partners to further turns inward by Washington, DC.

To read the full Zeitgeist Series Briefing as it appears on the Global Trade Alert website, click here.

To read the full report as a PDF, click here.

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