In the past several years, nationalistic rhetoric and support for protectionist trade policies have risen sharply across the world. The election of President Donald Trump signaled that Americans are dissatisfied with the economy, including foreign trade. But others point out that the United States often benefits from trade.
Take a look at our chart below to see the U.S. states most reliant on foreign trade.
The chart above shows each state by Gross Domestic Product (GDP) and trade shares as a percentage of GDP. Each state is represented by a circle. Inside each state’s circle is a smaller, pink circle that shows each state’s proportional reliance on foreign trade, as a share of GDP. Trade shares as a percentage of GDP is measured by adding the value of both the state’s imports and exports and dividing by the state’s GDP. The data were collected from the Bureau of Economic Analysis in conjunction with the Census Bureau.
The Five States Most Reliant on Trade, by Trade Shares of GDP
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Michigan – 38%
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Louisiana – 35.1%
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South Carolina – 34.8%
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Tennessee – 34.7%
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Kentucky – 34.3%
The Five Sates Least Reliant on Trade, by Trade Shares of GDP
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South Dakota – 5.3%
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Wyoming – 5.8%
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New Mexico – 6.5%
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Colorado – 6.8%
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Hawaii – 7.0%
From the chart, it is easy to see how much the U.S. economy relies on foreign trade. But some states rely on international trade more than others. Michigan is that state that relies on foreign trade the most, proportional to its GDP. This is most likely due to the fact that nearly all of America’s largest car companies are located in Michigan. Much of Michigan’s large international trade sheet is due to the North American Free Trade Agreement (NAFTA), which facilitates trade between the United States, Mexico and Canada. In fact, many states list Canada and/or Mexico as their top trading partner. Second on the list of states that are the most reliant on foreign trade is Louisiana. Contrary to most other states, Louisiana does not list Mexico or Canada as a top trading partner. Because of Louisiana’s rail connections and access to the Gulf of Mexico, which has an abundance of energy resources, the state’s top import partner is Saudi Arabia. Louisiana’s top export partner is China, who swallows up much of the state’s energy products.
At the bottom of the list of states reliant on foreign trade, there are states with low populations. Wyoming has the lowest population of all states. Hawaii, New Mexico and South Dakota all have populations below 2.1 million people. Colorado has a population of around 5.4 million people. States with a low population rely less on international trade because there are less major trade hubs and major corporations in low population states. In fact, most of the states that rely on foreign trade have major trade hubs. Michigan and Tennessee are home to many auto manufacturing plants, both domestic and international. South Carolina and Washington are both home to the major business operations of Boeing, the world’s largest aerospace company. Boeing is the largest manufacturing exporter in the United States.
From the chart, it is clear that the U.S. economy is at least partially reliant on foreign trade. This is especially true for states with major trade hubs and multinational corporations. At the same time, low population states without major trade hubs are not very reliant on international trade. If President Trump does raise tariffs or changes existing trade agreement in a major way, he should do so carefully and diligently. Even a minor change to the international supply chain of the United States could disrupt business and harm the labor market.
Sources: Table 1.1