Almost two-thirds of American foreign trade transactions in the first eleven months of this year took place with friends and treaty allies.

Canada and Mexico account for about one-third of the U.S. foreign trade business, and there is every reason to expect that those two countries will remain America’s largest trade partners – regardless of respective political changes.

With 18% of American merchandise trade, the European Union will probably hold on to its current U.S. market share, especially since growing E.U. recession pressures will force the trade bloc’s businesses to export more in order to survive.

America’s strong east Asian allies like Japan and South Korea, and a few smaller friends in that part of the world, generate another 10% of the U.S. trade business. Most of those countries represent steady U.S. trade partners despite intra-Asian economic integration trends.

America’s current trade patterns are reflecting policies stemming from national security estimates. And these policies will not change -- unless there are substantially new assessments of national interests and sociopolitical values within the trans-Atlantic community.

So, the message to people worrying about American presidential elections is: Relax.

Such a zen message is particularly relevant to alarmist views of E.U.’s opinion leaders.

Germany and the E.U. are getting away with huge trade surpluses

The European trading bloc would do well, however, to take a closer look at its growing American surpluses, and its allegedly unfair trade and investment policies toward the U.S. In the January-November period of this year, that surplus rose 4.3% from the year earlier to $191.2 billion and accounted for one-fifth of America’s total trade gap.

That could be one of the issues no matter who takes the U.S. presidency next November. For Washington, the European trading fortress has always been a very sensitive issue.

So, taking it all out on Trump is neither fair nor accurate. The Europeans made good money on their U.S. business during Trump’s tenure: over those four years their trade surplus increased 21%, ending up at $183.4 billion in 2020. During Biden years, their trade surplus rose only 4%.

Also, the Democrats have kept Trump’s import tariffs on steel and aluminum under a more stringent trade regime of “tariff rate quotas.”

Again, the E.U.’s systematic and excessive surpluses on U.S. trades will be closely scrutinized by the next administration – Republican or Democrat – because negative and quite unbalanced external accounts will be a big problem for an economy expected to slow down this year to a growth rate of 1%. In that context, one can anticipate that the E.U trade issue will be raised, with a particular focus on Germany’s huge trade surpluses representing 7% of GDP.

East Asia is a much more complicated problem for American trade policy.

Japan and South Korea are close allies whose exports are main engines of economic activity. In Japan, net exports last year accounted for an estimated one half of GDP growth. A similar trade balance contribution to economic growth is forecast for this year in South Korea.

U.S. should not allow large trade deficits

Both countries are running rapidly increasing trade surpluses with the U.S. Washington will most probably tolerate – or perhaps even encourage -- that trend to strengthen its U.S.-Japan–Korea political and military ties, with extensions to Australia.

China also continues to record a large advantage in its U.S. trades. Accounting for only 11% of American foreign trade, China supplies 14% of total U.S. imports, and its estimated $280 billion surplus this year will be close to one-third of American total trade deficit.

Despite that, Beijing does not seem to consider such a trade imbalance a serious structural problem in its tense and volatile U.S. ties. China complains about its U.S. trade problems and alleged “suppression of Chinese companies” in American markets, while its merchandise sales to the U.S. are three times higher than its goods purchases from the U.S.

Beijing’s view that such a hugely unbalanced trade is caused by American limits on exports to China does not seem plausible. Washington is tightly controlling exports of dual use technologies and the most sophisticated IT products, but there is a vast array of other American products and services that are readily available for export sales.

The outlook for U.S.-China trade is not promising. The two countries are on a verge of open military conflict in the South China Sea. At this writing, the Chinese are reporting reinforced “combat patrols” while the destroyer USS John Finn is transiting through the Taiwan Strait, and three U.S. aircraft carrier strike groups are reportedly poised to probe China’s defenses along its contested maritime borders.

America’s strategic security considerations will continue to channel its flows of trade and finance toward its friends and allies. That’s the way it should be, but the U.S. must pay greater attention to its trade balances. Raising foreign debt at a time of America’s net international liabilities of $18.2 trillion is not a good idea.