Largest trade relationships in the world

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Largest Trade Relationships in the World

We have all been bombarded by tremendous volatility over the past 10 days.  Despite this, VIX is approaching all-time lows.  We hate the use of VIX as some sort of predictor of future volatility.  The VIX is simply a measure of what the market is like today.  The market is underpricing risk, given the current political climate.

Amidst the extreme statements being made around the world, we thought it would be useful to look at the largest bilateral trade relationships in the world.  We hope this provides a helpful basis from which discussions and dialogue can be framed.

The largest trade relationships are rather concentrated.  Out of 40 total possible countries in the list above, there are only 14 total countries; recognizing that the EU for our purposes is treated as one country for economic purposes.  Should the US sabotage its relationship with Mexico, it provides an opportunity for both the EU and China to benefit by stepping into the void created by the United States.

A rather useful study of each US state’s largest trade partner is available through the Globe and Mail.  The key insight from this work is that 38 US states’ largest trade partner is Canada and 4 US states’ largest trade partner is Mexico.  Those 4 states though, include juggernauts, California and Texas which combined, have 21% of the United States’ population.

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