Why is U.S. losing its economic leverage?

 CHINA IS NOW THE DOMINANT TRADE PARTNER FOR 70% OF COUNTRIES

50% OF COUNTRIES HAVE DOUBLE TRADE WITH CHINA THAN US

We often hear how China is taking advantage of the U.S. in trade and the U.S. must now use its economic power to limit China's growth and economic expansion. A look at the 2 maps below indicate the difference in China vs U.S. trade performance with the world. I would say that horse is long out of the barn and the U.S. no longer has the economic leverage to block or diminish China's trading strength around the world. Sanctions and tariffs will not be able to stop the economic expansion of China nor will threats of war.

Lowy Institute graphic

The graphic is telling, but it also does not take into account that much of this growth has occurred in the last 10 years. It is no coincidence that this expansion has occurred after the onset of the U.S. wars in the middle east, efforts by several U.S. administrations to engage in trade accords with China and others. It is also interesting that this growth has occurred in spite of a U.S. policy of containment focused on China. A policy of sanctions, tariffs, embargo's of certain materials have all resulted in China actually becoming more self sufficient and continuing to expand.

Embargos of computer chips reversed China's $400 billion annual import of chips from the U.S to its being now a major exporter of computer chips at far less cost. It has been a negative effect on U.S. chip makers. Other efforts at embargos has resulted in China restricting the sale of vital rare earth minerals in response. 

The reality is that China has continued to enjoy a trading volume with the rest of the world, without threats, intimidation or sanctions, but by offering the best deal and opportunity for its partners to both prosper, always the best interaction in trade. 

The U.S. should take into account that the ability to buy low cost merchandise from China has kept the inflation rate low in the U.S. even with its habit of massive deficit spending. Sadly, China has enabled the U.S. federal government to be very fiscally irresponsible for all these years.

As for the U.S. losing its competitiveness, that is largely due to the massive repressive regulation and taxation that makes, made in the USA, increasingly prohibitive. If the U.S. would correct it all its disincentives to produce here it would take 30 years to become a positive reality.

While many will take this reality as offensive it is the world as it is today and requires a reexamination of policies both at home and abroad to ever hope to be successful. What is needed is more cooperation for mutual prosperity, rather than threats of economic or military force.