Some have argued that the trade disruption caused by the coronavirus puts the U.S. economy in grave danger. These fears are overstated. Exports are about 11.7 percent of U.S. GDP, and imports are equal to about 14.5 percent of GDP, and much of this trade (goods and services) is likely to be little affected by the virus.
Trade statistics, even more so than most economic statistics, are notoriously weak. Most of the trillions of dollars of goods that go back and forth over the world’s borders are in containers that are typically lightly or not inspected. The sheer volume of trade makes detailed inspection almost impossible. There are sophisticated detection devices for drugs, nuclear materials and explosives, but most of the rest is done on an honor system, particularly when it comes to the proper value of a shipment.
Bulk commodities — like coal, iron ore, bauxite, and agricultural grains and fresh fruits and vegetables always have some loss in transit. (Back in the 1980s, I served on a bilateral U.S.-Canadian committee dealing with economic issues. At the time, I remember being astounded by the huge discrepancy between what U.S. and Canadian authorities were reporting in terms of exports and imports between the two countries. It was certainly worse with many other countries. The reporting — because it relies by necessity on many imperfect humans in the chain, and many incentives to misreport — is unlikely to get better.)
There is trade between countries both in physical goods and services. The trade in services has been and will continue to grow faster than the goods sector and, in many ways, is far less measurable. In the past, buildings were typically designed by local architects. Large projects are now often designed by teams of architects and teams of engineers located in many different countries, and the drawings are shared by electronic means in real time. The iPhone is largely designed in California, built from components from dozens of countries, and assembled in more than one country — and its software written who knows where. As a result, there are never-ending trade statistic and tax allocation fights among countries — because there are no commonly agreed upon answers. Google and Facebook and others are everywhere and nowhere.
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See Also:
(2) China’s Communist Government Catches Coronavirus
(3) Bernie Sanders Wouldn’t Close The Border To Prevent The Spread Of Wuhan Virus
