FACT: ILO: $236 billion in worldwide profits from forced labor, three-quarters of it from forced sex work.

THE NUMBERS: ILO estimates of forced labor worldwide, 2021 – 

Total:	27.6 million
Sex work	6.3 million
“Industry”*	6.3 million
Services	5.5 million
Governments:	3.9 million
Agriculture	2.1 million
Domestic service	1.4 million
Other:	1.9 million

* Includes construction, manufacturing, mining and quarrying, and utilities.

WHAT THEY MEAN:

From the International Labour Organization, two reports describe the shadow-world economy of forced labor:

The first Global Estimates of Modern Slavery Forced Labour and Forced Marriage, released in 2022, develops a human picture by estimating the scale of forced labor in the world, describing the various forms it can take, and providing details by industry, age, gender, and other characteristics. The core number: in 2021, 27.6 million of the world’s 3.4 billion workers — 0.8%, just under one in a hundred — were in various forms of “forced labour,” defined as “work that is both involuntary and under penalty or menace of a penalty (coercion)”.  The most common form, representing 36% of the 27.6 million workers — 9.9 million people — involves workers trapped in jobs by withholding pay.  Others include debt bondage, threat of violence by criminal gangs (often in sex work), and in 1% of cases chattel slavery.

By industry, the ILO estimates 3.9 million people in state-driven forced labor programs, and 6.3 million in forced sex work, including 4.9 million women and girls and 1.4 million men and boys (or, alternatively, 4.6 million adults and 1.7 million children).  Another 6.3 million are in private-sector “industrial” work; 5.5 million in services; 2.1 million in agriculture; 1.4 million in domestic service such as maid and nanny work; and 1.9 million in other fields. By region, 55% of the total — 15.1 million people — were in Asia/Pacific countries, a figure slightly below Asia’s 59% share of the world workforce; the highest forced labor rate, proportional to workforce, was in the Middle East, and the lowest in sub-Saharan Africa. ILO also finds cross-border migrant workers at especially high risk, making make up 15% of the 27.6 million — 4.1 million people — but only 5% of the total world workforce. The report does not speculate on how much-forced labor goods production enters international trade flows. It notes, though, that forced labor rates appear “highest in severity and scale” in “informal micro- and small enterprises operating at the lower links of supply chains in high-risk sectors and locations,” and that with respect to trade destined for wealthier countries, forced labor is likely most common in “raw materials production in the lower tiers of supply chains of consumer goods.”

The second report, “Profits and Poverty: The Economics of Forced Labour,” came out this past March and adds financial numbers.  Two large ones stand out:

1. A quarter trillion dollars in profits: According to this report, forced labor enterprises generated $236 billion in profits worldwide.  To put this in perspective, the IMF estimates the world’s 2021 GDP at $97 trillion, and McKinsey consultants have guessed that corporate profits in general have been about 8% to 10% of world GDP over the last decade.  With the caution that GDP estimates in general are blurry and estimates of the size of criminal enterprises especially so, these figures suggest that forced-labor profits amount to about 2% of about $10 trillion in total business profits, and about 0.2% of world GDP. Looked at from a different angle, in 2021 the world’s most profitable company (Saudi Aramco), reported $110 billion in profit.

2. Three-quarters of forced-labor profit comes from forced sex work: The ILO believes about $173 billion of this $236 billion in profit — essentially three-quarters of the total — comes from forced sex work.  (Again, the 6.3 million people in forced sex work are about a quarter of the world’s forced labor victims.) The remaining $64 billion includes $35 billion from industry, $20.9 billion from services, $5 billion from agriculture, and $2 billion from domestic service. The report also provides a ‘profit per victim’ range, illustrating the especially high profits drawn from victims of forced sex work: $27,252 for forced sex work, $4,944 in industry, $3,407 in services, $2,113 in agriculture, and $1,570 from domestic service. ILO suggests that the very high extraction of profits from forced sex work reflects the fact that “in most cases people in forced commercial sexual exploitation are paid very little or nothing at all,” are particularly likely to be held in debt bondage, and typically have “limited or no access to justice.”

FURTHER READING

The ILO’s 2022 look at the human world of forced labor (as of 2021), with totals by region, industry, and explanations of different varieties of abuse.

And follows up this March with an investigation of profits.

Policy:

The ILO reports illustrate a world.  How might governments and observers respond?  With many different varieties of forced labor, responses vary but include a mix of police work and courts, media and public exposure, diplomacy, Customs enforcement, and other options. Two contemporary cases — the eradication of government-sponsored forced labor in Uzbekistan’s cotton industry over the 2010s, and the Biden administration’s more recent work to eliminate forced labor from Malaysian rubber-glove production, offer some insights on successful approaches.

Uzbek cotton:

Put briefly, Uzbekistan’s cotton industry is a large part of the national economy, accounting for about 20% of Uzbekistan’s export earnings.  For the first 25 years of its post-Soviet history, the Uzbek government required residents of cotton-growing districts to participate in autumn cotton harvesting. As such, it was a state-led forced labor program rather than a collection of small-scale private enterprises the ILO report suggests account for most world forced labor. Over the 2010s, a combination of international pressure and internal reform led the Uzbek government to abolish this system and convert cotton harvesting to paid work. Core factors in this reform include:

(a) A fifteen-year international activist effort through the “Cotton Campaign” involving businesses, labor unions, and human rights groups, to bring attention to forced labor in the cotton industry and discourage purchases of Uzbekistan cotton.

(b) International government pressures, in the U.S. case including regular human rights reports published by the State and Labor Departments, and a “review,” entailing possible cancellation, of the tariff waivers Uzbekistan received through the Generalized System of Preferences.

(c) Contingent factors, in particular, the death in office of post-Soviet leader Islam Karimov and his replacement by a new leader, Shavkat Mirziyoyev, whose government hoped to repair the reputational damage associated with forced labor and put sustained effort, with ILO advice and monitoring, into reshaping the cotton industry.

A March 2022 ILO report announcing an end to “systemic forced labour and child labour” in Uzbek cotton harvesting.

The Cotton Campaign lifts its boycott of Uzbek cotton, March 2022.

And via the Uzbekistan Embassy in D.C., remarks from Tanila Narbaeva (Chair of National Commission on Combatting Human Trafficking and Forced Labor) on the abolition of forced labor and next steps in labor reform.

Rubber gloves:

A more recent Biden administration program — the  investigation of rubber gloves produced by six Malaysian companies from 2019 through 2021, and remediation afterward — addresses a situation closer to those the ILO reports are most common. The line workers in these glove factories are mostly migrants from other countries; U.S. Customs and Border Protection investigators in 2021 found credible evidence of unfree recruitment, debt bondage, confiscation of passports, and other abuses.  CBP accordingly prohibited imports from these companies and their subsidiaries through a “Withhold Release Order”. Following this, a program of consultation and reform, including through the Malaysian government, the ILO, and the companies, enabled CBP to find that many of the companies had remediated the conditions and reopen trade. A chronology:

The Department of Labor reviews Customs and Border Protection’s initial Withhold Release Order, July 2020 through September 2021.

CBP’s “Withhold Release Order” banning imports, November 2021.

ILO’s report on Malaysian rubber glove manufacturing and options.

… and an ILO progress report from 2023.

CBP reopens trade, April 2023.

And lists current “Withhold Release Orders”.

And two more general perspectives on U.S. policy:

U.S. Customs and Border Protection explains forced labor-product interdiction.

The Department of Labor’s International Labor Affairs Bureau on its child labor and forced labor programs.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: Estimated Cost to Families of Trump Tariff Proposal: $1,500 – $1,700

THE NUMBERS:

Median U.S. household budget for goods, 2022:*	$19,154
Extra U.S. household costs from a 10% tariff:**	$1,500 – $1,700

*  Bureau of Labor Statistics, Consumer Expenditure Survey. The total includes BLS’ 2022 figures for mean household spending on food at home, alcohol, natural gas, fuel oil, housekeeping supplies excluding postage stamps, household furnishings, apparel and services, new vehicle purchases, gasoline, medicines, toys, and personal care products.

** $1,500 estimate from Center for American Progress; $1,700 from Peterson Institute for International Economics

WHAT THEY MEAN:

This fall’s core choice is more basic than policy: Can a person who has attempted to overthrow a settled election, and called for the “termination” of unspecified parts of the Constitution, keep an oath to “faithfully execute the office of President of the United States” and “preserve, protect, and defend the Constitution”? But though secondary concerns this time, policies still have human consequences. Three notes therefore on tariffs and prices, with an introduction and a coda:

Intro: As we noted in March, the Trump campaign’s proposal of a 10% worldwide tariff, plus 60% on Chinese-made goods, would be the highest U.S. tariff rate since the late 1930s. Meanwhile, Dr. Peter Navarro — a former trade personality as Trump-era “Director of the Office of Manufacturing and Trade Policy,” a minor player in the attempt to overthrow the 2020 election, and current resident of the Federal Correctional Institution in Miami — skirted federal prison policy last week by connecting with news website Semafor for an email interview.  He uses the opportunity to hold forth on a hypothetical second Trump term (mass deportations, immediate purge of the Federal Reserve), air grievances with former colleagues, and insist that tariffs do not affect prices: “In a general equilibrium world, tariffs over time boost growth and real wages; they are not inflationary.”

What do definitions and evidence say?

Definition: As the Commerce Department’s International Trade Administration, explains to hopeful U.S. exporting businesses, a tariff “is a tax levied by governments on the value including freight and insurance of imported products,” which “increase[s] the cost of your product to the foreign buyer and may affect your competitiveness.” In the case of consumer goods, retailers pay tariffs at the border, and shoppers ultimately pay. For industrial inputs, the tariff payers are farmers, manufacturers, construction firms, and other goods-using industries, and tariffs raise their production costs. This in turn raises the prices they charge customers, and/or erodes their competitiveness against imports or exports. Either way, tariffs are meant to raise prices and generally succeed.

Recent Experience: Moving from on-paper definition to recent experience, the 2018/19 tariffs on metals and Chinese-made products raised the U.S.’ overall tariff rate from 1.8% to 2.8%. Most of the impact seems to have fallen on manufacturers and other goods-users — logically, since while the permanent U.S. tariff system mainly taxes clothes and other consumer goods, Trump-era tariffs are more on industrial supplies. The Government Accountability Office’s examination of the process for making “exclusions” to the China tariffs illustrates this: GAO found 52,810 relief appeals, over half of which — 27,646 — came from buyers of capital goods and industrial inputs worried they couldn’t find affordable alternatives. Another 12,633 came from buyers of auto parts. Assessments of the resulting price increase — e.g. by the Peterson Institute for International Economics and San Francisco Fed staff economists — range from 0.3% to 1.3%.

Next: The campaign proposal is much larger. Two independent nonprofits, studying its probable effect this month, basically agree on what to expect. Mary Lovely and Kimberly Clausing, writing for the Peterson Institute of International Economics earlier this month, estimate an additional $1,700 in additional costs per U.S. household, with the greatest loss of purchasing power in the lowest-income families.  Brendan Duke, a former National Economic Council economist now with the Center for American Progress, finds a similar $1,500 increase in costs per middle-income household, with specific examples including $120 in higher payment for fuels, $90 for medicine, $220 for autos and boats, $80 for consumer electronics, and $90 for food. Overall, the Bureau of Labor Statistics’ Consumer Expenditure Survey reports that on average households spent $19,154* on goods in 2022. Against this background, a $1,500 or $1,700 cost increase is something like an 8% or 9% burst of inflation in goods prices, or an equivalently high “tax increase” depending on the angle from which you look at it. Prices are higher either way.

Coda: Again, policy issues are secondary this fall. But Rep. Bennie Thompson (D-Miss.), Chair of the House’s January 6th  Committee in 2022, reminds us of why Dr. Navarro must do his interviews from the Miami FCI this summer, and that policy can’t be wholly separated from the really basic choice:

“Peter Navarro abandoned his oath to the Constitution and abused the public trust while he worked as a trade adviser to former President Trump when, in the days leading up to January 6th, he worked to keep a defeated incumbent in the White House. He abused it again when he willfully defied a lawful subpoena from the January 6th Select Committee to answer questions about the lead-up to that deadly day. Last summer’s guilty verdict and today’s sentence are the consequence.”

FURTHER READING

Looking back:

Former Treasury Secretary Larry Summers assesses estimates of potential to roll back price increases through tariff cuts, finds a 1% price reduction credible (2022), with link to Peterson Institute for International Economics research.

Pre-trade war, San Francisco Fed staff economists estimate price inflation.

And the GAO looks back from 2021 on government handling of requests for exclusions from “301” tariffs in 2018 and 2019.

Looking ahead, three views on a 10% across-the-board tariff:

The Peterson Institute’s Mary Lovely & Kimberly Clausing foresee a $1,700 per household cost increase.

Center for American Progress’ Brendan Duke estimates $1,500.

… and the Bureau of Labor Statistics Consumer Expenditure Survey puts these numbers in context with data (through 2022) on how much families spend.

And completing the ideological balance (though not quite parallel with the PIIE and CAP studies, as the focus is on macro rather than extra household costs), Erica York of the Tax Foundation sees a GDP contraction and higher prices ahead.

Update from the Federal Corrections Institution/Miami:

Navarro interview on mass deportations, Federal Reserve purge, grudge against Gary Cohn, tariffs, etc.

The Federal Correctional Institution in Miami, with explanations of work requirements (7 ½ hours per day), media policy (press visits allowed, though not “to provide publicity for an inmate or special privileges for the news media, but rather to ensure a better-informed public”), and a non-luxurious but also non-Spartan commissary menu.

And Rep. Bennie Thompson (D-Miss.) reminds us of why he’s there.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: A new container ship launches every day.

THE NUMBERS: Largest container ship by year, in TEU* capacity –

2024:	24,327 TEU (MSC Irina)
2020:	23,992 TEU (Ever Ace)
2014:	19,100 TEU (CLC Globe)
2010:	14,770 TEU (Emma Maersk)
2004:	8,500 TEU (CLC Asia)
2000:	8,160 TEU (Sovereign Maersk)
1990:	4,614 TEU (American New York)
1974:	2,984 TEU (Hamburg Express)
1956:	56 TEU (Ideal-X)

*  “Twenty-foot Equivalent Units.” A TEU represents one 20 x 8 x 8.5 foot shipping container; a 40-foot container is two TEUs.

WHAT THEY MEAN:

After a squad of tugboats pulled the stranded Dali away from the Key Bridge wreckage on Monday, the Port of Baltimore’s operators hope to reopen their main shipping channel by the end of May, and Danish shipping giant Maersk plans to start container service to the Port again by early June. With a brightening outlook for Baltimore’s port workers and users, here are four notes on the container-shipping fleet:

There are more container ships each year: Alphaliner, a Paris-based maritime consultancy, counts 6936 container ships operating worldwide this week, up from 5,101 in 2014.  Mainly built in China, Korea, and Japan, these ships make up about 6% of the world’s 105,000 cargo vessels, but (being large ships) have a seventh of the world’s 2.2. billion deadweight tons — that is, carrying capacity — of merchant shipping.  The full container fleet has a combined capacity of 29.7 million TEU, up about 10% from the 25.8 million TEU at President Biden’s inauguration, and up 50% from the 19.9 million TEU of 2014. This growth is not slowing: Denmark-based shipping association BIMCO says 350 new container ships launched in 2023, and 2024 will likely top 475. A table illustrates:

2024	29.7 million TEU
2020	25.8 million TEU
2014	19.9 million TEU
2010	12.8 million TEU
2000	4.3 million TEU
1990	1.2 million TEU
1980	0.5 million TEU

They are getting bigger: The Dali is 948 feet or 300 meters long, with deadweight tonnage of 116,851 tons and a crew of 21.  Built by Hyundai and launched in 2015, it has a capacity of 9,971 “TEUs,” meaning it can carry just under 10,000 standard 20’ x 8’ x 8.5’ shipping containers at a time. Twenty years ago, the Dali would have been easily the world’s largest container ship. Today it’s still well above median — average capacity across the whole fleet is now about 4,600 TEU — but has less than half the 24,000+ TEU capacity of its largest relatives.

As of this month, 121 ships can carry 20,000 TEU or more. The largest one on the water today is MSC Irina, owned by Geneva-based Mediterranean Shipping Corporation, whose capacity more than doubles Dali’s at 24,326 TEU and 240,739 deadweight tons.  Delivered in March 2023 from a Chinese shipyard and currently in Busan, MSC Irina is 400 meters/1,312 feet long.

They are mostly new: The container-ship concept is almost 70 years old — the first, Ideal-X, launched from Newark in 1956 — but most of the actual ships are young, and every 20,000+ TEU ship has been built since 2017.  UNCTAD’s most recent Review of Maritime Transport says the average container ship is 14 years old, while the average age of cargo vessels in general — container ships plus bulk carriers, general cargo, tankers, ro/ro, etc. — is 22.

And they don’t need many people: Though not exactly a giant floating robot, a modern container ship isn’t far from that. Dali’s forlorn crew totals 21 people — 20 from India, one Sri Lankan, finally getting some land time today after being stuck on board doing maintenance and responding to investigation queries since March — and even MSC Irina with its 24,000 containers needs just 25.  To put this in perspective, this is no more staff than you’d find in a medium-sized restaurant or hardware store.  Alternatively, Great Republic — the largest 19th-century clipper ship, built to sail back and forth from New to Australia — needed a crew of 67 to manage about 5000 tons of cargo.

FURTHER READING

Updates:

Maryland Port Authority updates.

Maersk plans an early-June return to Port of Baltimore cargo service.

And Gov. Moore’s interim support program for Port workers and distressed businesses.

Container-ship data:

UNCTAD’s Review of Maritime Transport series has data and trends for container ships, oil tankers, port efficiency, and more. The most recent edition, out last November, counts 105,400 cargo ships around the world, or about 5,000 more than the 99,800 they found in 2020.

Alphaliner Top 100 has day-to-day updates of current container capacity, worldwide and by shipping firm.

The Copenhagen-based Baltic and International Maritime Council (BIMCO), in a January “Shipping Number of the Week”, reports a likely 478 new containership launched in 2024, after a record 350 in 2023.

… and a decade-old but still evocative visualization of daily maritime transports, with small lights representing a hundred thousand ships against a darkened blue-grey ocean backdrop

Ship comparisons:

Combining various tallies — UNCTAD for cargo, military sites for navies, FAO for fisheries—– the world’s large-vessel fleet comes out at about 170,000. (105,000 cargo vessels, 45,000 large fishing boats, 10,000 navy ships, 5,000 cruise ships, with miscellaneous cable layers, LNG tankers, yachts, and so forth making up the rest.) At the top end, container ships are the longest by about 20 meters. Bulk ore carriers and supertankers are a bit shorter but have more cargo space. A quick look at the largest in each category:

Container ship: Mediterranean Shipping Corp.’s 400-meter, 24,347-TEU MSC Irina.

Oil tankers: Ultra-Large Capacity supertankers, though shorter than the top container ships at 380 meters, at 442,000 deadweight tons can carry twice the cargo weight. The largest are the four T1s, dating to the early 2000s and named for continents. TI-Europe is in Singapore.

Bulk cargo carriers: The 35 Valemax-grade iron-ore freighters are very slightly smaller than the tankers, 360 meters long with deadweight tonnage up to 400,000 tons. Built between 2011 and 2016 (again by Chinese, Korean, and Japanese yards) they carry iron ore from Brazil and Australia to China.

Military: U.S. Navy’s 337-meter Gerald R. Ford aircraft carrier is the largest naval vessel on the water, launched from the Newport News yard in 2013, and the first of the 11 Ford-class carriers replacing the Nimitz-class fleet.

Roll-on/Roll-off: The standard automobile carriers are a bit smaller. The largest is the 265-meter MV-Tonberg, built by Mitsubishi in 2012 and operated by Norwegian carrier Wallenius Wilhelmsen. It can carry 8500 cars and trucks at a time.

Fishing: The largest fishing vessel, the Vladivostok 2000, is 228 meters and 49,000 tons. A converted oil tanker with a dismal history of IUU (illegal/unreported/unregulated) fishing, V2K is blacklisted in the South Pacific but continues to operate in northern waters. It’s currently berthed in the eponymous city of Vladivostok.

Cruise ship: The Icon of the Seas at 385 meters, launched last January and built for 7,600 passengers. By comparison, the largest 19th-century passenger ship, Victorian super-engineer Isambard Kingdom Brunel’s 211-meter Great Eastern, could carry nearly 5,000. The BBC on IotS.

Shipbuilding:

A gloomy two-pager from CRS on cargo vessel construction worldwide, and the very modest U.S. role in it over the last 50 years.

And some maritime-logistics lit.:

GPS and satellite communication, 60-foot propeller blades, computer terminals, and crane loading — Horatio Clare’s Down to the Sea in Ships (2015) tracks the Gerd Maersk, a 6,600-TEU ship built in 2006 — still operating, en route this week from Oakland to Qingdao — on a two-month trip from Felixstowe through the Suez Canal to Malaysia, Vietnam, China, and Los Angeles. Detail on crew life (Filipino ratings, European and Indian officers; no alcohol at any time), cargo loading, rules for avoiding Red Sea pirates, the approach to the Port of L.A., etc.

Coal-burners and on-board smokestacks, radio, and breakbulk cargo — Richard Hughes’ In Hazard (1938), recounts the fictional passage of a British general-cargo vessel with a ‘globalized’ 1930s crew (Chinese ratings, U.K. and American officers, few if any alcohol limits) from Virginia through a gigantic Caribbean hurricane.

Wood, rope, canvas, muscle, and wind — Richard Henry Dana’s Two Years Before the Mast (1840) on the Pilgrim’s five-month journey from Boston to pre-Gold Rush California via Cape Horn, and back a year later.  (Mostly New England crew with some Europeans; strict alcohol limits for sailors, but not for the mates or captain.)  Lots here to disenchant age-of-sail romantics – a drowning, a scurvy case, two of the Pilgrim’s 12 sailors flogged for back-talk, ice storms, constant deck-scrubbing, etc. Also looks at early California: Los Angeles, “a large and flourishing town of about twenty thousand inhabitants, with brick sidewalks”, is full then as now of helpful and friendly people; on the other hand, “nothing but the character of the people prevents Monterey from becoming a great town”.  San Francisco has promise (“if California ever becomes a prosperous country, this bay will be the centre of its prosperity”); also see the large Native Hawaiian role in West Coast shipping, and Dana’s very disparaging, no-filter comments on visitors from Russia’s Alaska colony, whose southernmost fort was 90 miles north of present-day Oakland.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: U.S. auto production unchanged since ‘USMCA’ replaced ‘NAFTA’ in 2020.

THE NUMBERS: U.S. car and light truck production* –

2023	10.6 million vehicles
1994-2019 average	10.7 million vehicles
1975-1993 average	10.3 million vehicles

* Bureau of Transportation Statistics for 1993-2021; OICA for 2022 and 2023. From 1993-2019, production ranged from a low of 5.7 million vehicles during the financial crisis in 2010 to a peak of 13.0 million in 1999.

WHAT THEY MEAN:

Trump administration negotiators in 2018 said their “primary objective” in renegotiating the North American Free Trade Agreement was “to improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries.”  This plainly didn’t happen — deficits instead rose by a combined $91 billion by 2023 –—but not because a different agreement text or legislative drafting would have gotten a different outcome. Rather, the Trump group promised something a new agreement couldn’t, and therefore didn’t, deliver. (See below for a bit more.) As the resulting “USMCA” approaches its fourth birthday this June, the more interesting question is whether the four big real-world policy revisions separating it from the NAFTA — automotive trade, labor policy, environmental protection, internet policy, and digital data flows – are working.  Here’s a somewhat troubling look at the auto side:

As a point of reference, U.S. auto production averaged 10.7 million vehicles annually over NAFTA’s 26-year life, with output varying from a 13.0 million peak in 1999 to a financial crisis low of 5.7 million in 2009.  The 2016 figure was 12.2 million vehicles, of which two million went abroad for export and 10 million to American dealerships. Meanwhile, about 8 million vehicles arrived from abroad that year as imports, including 2.2 million from Mexico and 2.0 million from Canada under NAFTA’s tariff waivers. (The normal auto tariff rates are 2.5% on cars and 25% on light trucks.) According to the U.S. International Trade Commission’s “Dataweb,” about 1% of these vehicles arrived outside NAFTA — 39,000 passenger cars and 100 light trucks from Mexico, 6,000 cars from Canada — and so were subject to the regular tariffs.

USMCA’s U.S. negotiators and Congressional legislative text drafters hoped to (a) encourage more car and truck assembly in the United States, and (b) increase the “North American” parts, metal, and labor content of vehicles produced in the U.S., Mexico, and Canada for American, Mexican, and Canadian car-buyers. To this end, USMCA developed “rules of origin” — that is, legal definitions of what it means for a car or truck to be “made in” the U.S., Canada, or Mexico and therefore eligible for tariff waivers — much more restrictive than NAFTA’s. Briefly summarizing some complex formulae, NAFTA required a “regional value” of 62.5%.  This meant buyers had to certify that 62.5% of a car’s value was “North American”. That is, a sedan valued at $30,000 at the border needed to show that $18,750 of its parts, labor, metal, paint, and so forth had to come from the U.S., Canada, or Mexico to qualify. USMCA’s 46-page set of rules raised this “regional value” to 75% — $22,500 of the same $30,000 car — and added new requirements covering (i) use of parts, from brake linings and transmission shafts to ball bearings, gaskets, and radios; (ii) use of metals, with 70% of the steel and aluminum in a car or truck (by value) needing to come from North American mills or smelters; and (iii) labor input, with 45% of the labor value required to be “high-wage.” The rules take effect in over five years, beginning with USMCA’s “entry into force” in June 2020 and fully in effect by 2025.

What has happened since?

Output: Not much so far, at least in the U.S. Auto production fell sharply during the 2020 COVID pandemic to 8.8 million vehicles, and as of 2023 had rebounded to 10.6 million, slightly below the long-term NAFTA average. So to date, USMCA’s auto innovations have left U.S. production about the same, though they’re still new and might have larger effects later on.

Trade: Trade flows in total likewise haven’t changed drastically. Last year’s 8 million in new car and truck imports were about the same as those of 2016, with a few more from Mexico and a few less from Canada. But the detailed data published in the Dataweb suggest an unexpected shift: at least in car trade with Mexico, USMCA seems to be getting less use than NAFTA.  These figures report that in 2023, about 468,000 Mexican-made cars — 20% of the year’s 2.1 million total, 20 times the 2016 figure — arrived with the 2.5% MFN tariff rather than duty-free under USMCA.  Light truck imports have also shifted a bit, though much less dramatically, with 1700 arriving outside USMCA.  Canadian cars and trucks, by contrast, were almost all covered by USMCA.  The 468,000 outside-USMCA vehicles are not subject to any “rule of origin” at all, so if the Dataweb figures are correct rather than some kind of data entry problem, and don’t simply reflect a temporary adjustment as manufacturers get used to new rules, the tariffed cars can contain lots more foreign parts, metal, and so forth than their NAFTA-era predecessors.

A cautionary note: The USMCA is still new, the shift is mainly in car imports from Mexico rather than in trucks or U.S.-Canada trade, and auto production patterns take years to change. More generally, the slightly lower post-USMCA auto production in the U.S. isn’t necessarily related to the agreement; it could reflect unusual post-pandemic buying patterns, EV transition, etc. But these points duly noted, the revised auto rules so far (a) don’t seem to have brought more auto production to the U.S., and (b) if the tariffed, outside-USMCA imports continue to grow, could be encouraging more rather than less “international” content in “North American” cars. They haven’t by any means failed in the conclusive way Trump negotiators’ hope for lower trade deficits failed; but so far, they seem less than a resounding success, and maybe not an improvement.

FURTHER READING

USMCA text, see pp. 224-270 of Chapter 4 for rules governing cars, trucks, and parts.

Agreements and rules:

A U.S. Trade Representative Office Federal Register Notice from last March requests thoughts on supply-chain “resilience,” with Question 8 asking specifically about rules of origin:

“There is concern that preferential rules of origin in free trade agreements can operate as a “backdoor” benefiting goods and/or firms from countries that are not party to the agreements and are not bound by labor and environmental commitments. What actions could be taken to mitigate these risks and maximize production in the parties? What policies could support strong rules of origin and adherence to rules of origin?”

The FRN.

PPI’s Gresser, testifying at the hearing a week ago Thursday, carefully suggests that USTR’s phrasing is a bit off, as adjectives like “strong” or “weak” aren’t really the point. The low-drama response, using USMCA’s auto rules as a case in point.

“A well-designed rule strikes a balance, enabling firms to meet it easily and cheaply while not being so permissive as to reduce the benefit to the countries participating in the agreement.  Complex and very demanding rules, however, may be so costly or create such paperwork burdens that businesses choose not to use the agreement.  In this case they may continue importing under MFN tariffs (using any outside inputs they find convenient) or find non-FTA sources instead.”

Gresser testimony.

Global perspective:

Where do cars come from? The Organization of International Automobile Manufacturers’ country-by-country data show about a third of the world’s 93.5 million new cars made in China in 2023, and a sixth in the U.S./Canada/Mexico:

World Vehicle Production:	93.5 million
China	30.2 million
European Union	14.3 million
(Germany)	4.1 million
(France)	1.5 million
(Slovakia)	1.4 million
(Czechia)	1.4 million
(Italy)	0.9 million
United States	10.6 million
Japan	9.0 million
India	5.9 million
Korea	4.2 million
Mexico	4.0 million
Thailand	1.8 million
Canada	1.6 million
United Kingdom	1.0 million
All other	10.9 million

OICA’s production and sales data.

And from the Commerce Department, U.S. automotive trade data, sadly updated only through 2021.

And a note on balances:

The Trump administration’s 2018 “President’s Trade Agenda” report uses trade balance as the main grounds to renegotiate NAFTA:

“[O]ur goods trade balance with Mexico, until 1994 characterized by reciprocal trade flows, almost immediately soured after NAFTA implementation, with a deficit of over $15 billion in 1995, and over $71 billion by 2017. … USTR has set as its primary objective for these renegotiations – to improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries.”

As of 2023 — three years into USMCA — this same “goods trade balance” with Mexico was -$152 billion in deficit, and with Canada -$25.8 billion.  So, pretty total failure here, with both deficits doubled. The reason for this, though, isn’t any particular problem with the new agreement’s text or legislative drafting, though. Rather it’s that the Trump-era policy designers didn’t understand trade balances and promised something the agreement couldn’t deliver.

The U.S. trade balance is the difference between national savings and national investment. The nearly simultaneous 2017 tax bill raised fiscal deficits, and therefore reduced government savings. Unless for some reason families and businesses started to save more (and they didn’t), the overall U.S. trade deficit was naturally going to rise as a result.  With tariffs on China pushing U.S. purchasing of some formerly Chinese-made refrigerators, TV sets, clothing, etc. into other countries (especially Vietnam but also Mexico), the U.S.-China “bilateral” deficit dropped a bit, but this forced a larger increase with other countries, Mexico and Canada among them.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: U.S. R&D spending approaching $1 trillion per year.

THE NUMBERS: U.S. share of world “knowledge- and technology-intensive” manufacturing and services –

Manufacturing
2022	20.4%
2012	20.1%
Services
2022	39.7%
2012	29.3%

National Science Foundation, 2024.  Manufacturing includes chemicals; pharmaceuticals; weapons and ammunition; computer, electronic, and optical; electrical equipment; machinery; automotive; aerospace; railroad and other transport; and medical devices.  Services include IT and information services, software, and research and development.

WHAT THEY MEAN:

President Biden in October delivered seven Medals of Science and nine Medals of Technology and Innovation:  Dr. Marder of Brandeis for analysis of brain biochemistry and neurocircuitry, Caltech’s Professor Barish for detecting gravitational waves from merging black holes, Mary-Dell Chilton of Syngenta for agricultural biotechnology, Roy Cooper from the VA for inventing improved wheelchairs, along with Internet pioneers, 3D printing founders, social neurologists and more.  He took some time to note administration science policy highlights –— the Cancer Moonshot, the CHIPS and Science Act, climate research — but could perhaps have said a bit more.  The individual achievements and the government policy look less like one-offs than or unusual cases, than especially strong examples of a remarkable if little-recognized Biden-era boom in American science. Two indexes and then some comparisons:

1. Research and Development: Each year the National Science Foundation publishes figures on research and development spending.  Their latest edition launched in March.  It shows U.S. R&D investment rising from $717 billion in 2020 to a likely $886 billion in 2022, with government support up from $65 billion to $73 billion, business commitments from $520 billion to $673 billion, and nonprofit and academic funding from $43 billion to $47 billion. The overall jumps of 10% and 12% in 2021 and 2022 appear to be the largest in the last thirty years.  This makes America’s “research intensity” — R&D spending divided by national GDP — 3.5% by the NSF’s count, or 3.6% according to the OECD.  This figure is up from 2.8% in 2012 and 3.2% in 2019; or in a longer perspective, from 2.4% at the launch of the World Wide Web in 1993 and 2.6% during the moon-landing year 1969. If this “intensity” level held up through 2023, total U.S. science commitment in 2024 would top $1 trillion.

2. Working Scientists: The Bureau of Labor Statistics, meanwhile, reports a 26% growth in the count of working R&D scientists in the last three years, from 796,000 at the beginning of 2021 to 956,000 as the NSF launched its March R&D report. To put this in perspective, total employment in the U.S. has grown by 10% in the last three years.  So the lab workforce is rising more than twice as fast as the general workforce.  From another perspective, the 3.3-year jump of 160,000 scientists compares to a rise of 290,000 in the entire twenty years from the turn of the century to the end of 2020 (and has nearby analogues in similar jumps of 140,000 in engineering, and 300,000 in computer systems design).

Now to the comparisons:

Measured by spending, NSF’s $886 billion R&D estimate places the U.S. first in the world, and makes up about 30% of known R&D worldwide.  Measured by “research intensity”, OECD’s 3.6% estimate puts the U.S. fourth, behind only Israel’s 6.0%, Korea’s 5.2%, and Taiwan’s 4.0%. Comparable figures for other big economies include 3.4% for Japan, 3.1% for Germany, 2.9% for the U.K. 2.9%, 2.4% for China, and 2.2% for France. Rounding out the G-7, Canada is a bit below at 1.7%, and Galileo’s Italy a comparatively anemic 1.3%. A table with the top countries and the world’s ten largest economies:

Israel	6.0%
Korea	5.2%
Taiwan	4.0%
U.S.	3.6%
Sweden	3.4%
Japan	3.4%
Belgium	3.4%
Germany	3.1%
U.K.	2.9%
China	2.4%
France	2.2%
Canada	1.7%
Italy	1.3%
Brazil	1.2%
Russia	1.1%
India	0.7%

What about real-world output as opposed to spending and puttering about in labs?  In April, a few weeks after the R&D report, NSF’s busy editors put out another one looking at the world’s “Knowledge and Technology Intensive Industries”.  Complete with a new acronym, “KTI”, this examines production of a list of impressive things – aircraft and satellites, high-speed dental drills, self-guiding cars and computer software, digital technology, biologic medicines, etc. — and estimates world high-tech industry output at $11.1 trillion in 2022.  (This would be about 10% of world GDP.)  Here the U.S. has a peer — in fact, China’s $3.0 trillion shades America’s $2.9 trillion – while the EU comes in at $1.7 trillion, Japan $0.6 trillion, and Korea $0.4 trillion.  China’s leads show up in the manufacturing of computers, electronics, and optics, while the U.S. is top producer of medicines, medical devices, aerospace, software, and digital information.

And over time?  The American share of world “KTI” manufacturing, having fallen from 29.5% in 2002 to 20.1% in 2012, began a rebound during the Obama administration and has risen a bit to 20.5%.  Or, setting aside what other countries might be doing, the value of this output has grown from $1.3 trillion in 2020 to $1.6 trillion in 2022. The U.S. share of world “KTI” services production — the software, IT services, and research work noted above – has steadily risen, accelerated by the internet industry, from a world-leading 29.3% in 2012 to 39.7% in 2022. All of which suggests that Biden’s well-deserved praise for the individual neuroscientists, astronomers, wheelchair and Internet-backbone designers highlights not only exceptional personal achievement, but the fact that the administration deserves credit for some large-scale science policies and has reason to feel good about the last three years’ results.

FURTHER READING

Biden presents last year’s Medals of Science and of Technology and Innovation last October.

The White House’s Office of Science and Technology Policy.

… the Cancer Moonshot.

… and never out of fashion, Dr. Vannevar Bush’s original 1945 Endless Frontier report, arguing for a permanent government role in promotion of science and technology.

Assessment:

The National Science Foundation’s April 2024 Production and Trade of Knowledge- and Technology-Intensive Industries report.

And the American Association for the Advancement of Science reviews government policy.

And some data:

OECD’s estimates of R&D spending, GDP share, and science employment by country as of 2022.

And NSF’s State of U.S. Science and Engineering looks at American scientific research, education, workforce and more, with some international comparisons.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: 38 of the world’s 100 tallest buildings have opened since 2019.

THE NUMBERS: U.S.’ share of the world’s 100 tallest buildings –

2024	14
2020	14
2010	29
2000	47
1990	87
1950	91
1900	38

 

WHAT THEY MEAN:

An early architecture critic, the Venerable Rodolf Glaber of the Dijon Abbey, looks back from somewhere around the year 1040 to Europe’s turn-of-the-millennium cathedral boom:

“It was as though the world had shaken herself and cast off her old age, and clothed herself everywhere in a white garment of churches…”

Then this year: Merdeka 118, the pride of Kuala Lumpur, opened January 24 as the world’s second-tallest building and fourth officially “mega-tall”* skyscraper.  At 2,233 feet or 681 meters, and overtopped only by Dubai’s 2,787 foot/870 meters Burj Khalifa, M-118 is the most recent in Asia’s newly built ‘steel-and-glass garment’ of tall buildings.  To be precise, the New York-based Council on Tall Buildings and Urban Habitat reports that of the world’s 100 tallest buildings, 35 have opened since 2019, and 62 of the top 100 since 2014. Using computer-aided design and new alloys developed in the last generation — twisting facades to minimize wind torque, lightweight alloy cladding to resist heat, and so forth — they have metaphorically put the American skyline a bit in the shade.

U.S. urban skyscrapers using steel-girder-and-curtain-wall technology surpassed Glaber’s stone-on-stone cathedrals as the tallest buildings in the 1920s. As recently as 1990 the U.S. was home to 9 of the world’s top 10 buildings, and 87 of its top 100. The current count is about half Chinese, with the United Arab Emirates and the U.S. a tier down, and eight other mostly East and Southeast Asian countries making up the rest.  A rundown of the Council’s current 100-highest list looks like this:

(1) 46 in mainland China, including five of the top ten. The Shanghai Tower (2015, 2073 feet) joins M-118, Burj Khalifa, and the Makkah Clock Tower in Riyadh as one of four officially-recognized “megatalls” (above 1,968 feet); the 5th-ranked Ping An Tower in Shenzhen (2017) just misses at 1,965 feet.  Five more of the top 100 are in Hong Kong.

(2) 15 in the United Arab Emirates, including top-ranked Burj Kh., with fourteen in Dubai City.  Dubai for the past twenty years has held a lead over New York as the city with the highest ultra-tall count.

(3) 14 in the United States. Eight are in New York, with One World Trade Center seventh in the world at 1,776 feet.  The Empire State Building, open since 1931 and by far the oldest building in the top 100, ranks 53rd. Chicago has five, and Philadelphia has one, the 95th-place Comcast Tower. No other U.S. city has a top-100 building. (LA’s Wilshire Grand ranked 88th when it opened in 2017, but has already dropped to 104th.) By way of comparison, in 1990 17 U.S. cities had at least one of the world’s top 100 buildings, and New York alone had 23.

(4) 20 elsewhere: Five in Malaysia, another five in Russia, three in Korea, two apiece in Taiwan and Saudi Arabia, one each in Vietnam, Kuwait, and Indonesia.

By way of consolation, though the American skyline may no longer tower over its rivals, the U.S. intellectual role in skyscraper design and construction remains very big. Ultra-tall buildings are highly “globalized” efforts; the builders of Merdeka-118, for example, turned to New York-based LERA (Leslie E. Robertson Associates) to oversee its structural engineering, while U.S. firms Fisher Marantz Stone, Barker Mohandas, and CPP handled vertical transport, lighting systems, and wind stress design. (As well as Samsung’s construction wing for the building contract, Australian and Hong Kong architects, and a Finnish elevator company.) Overall, specialized U.S. architecture and engineering firms in Chicago, New York, New England, and California designed or co-designed nine of the ten buildings at the top of the current top 100 list, and five of the ten tallest openings in 2022 and 2023.

FURTHER READING

New York’s Council on Tall Building and Urban Habitat lists the world’s 100 tallest buildings in 2024, 2020, 2010, 2000, 1990, and 1980.  The 2025 list, assuming buildings now in the final-construction stage open as planned, will bring on 11 new ones of 1,145 feet and up, and by necessity drop numbers 90-100 off.  On net this means China’s share will rise from 46 to 47.  Dubai will also get another, and Cairo and Istanbul will join.  The U.S., Korea, Malaysia, and Russia will lose one each.

Merdeka 118.

… Samsung Construction explains the concrete — 400,000 tons of it, enough to “cover a football field to a height of 19 stories in one solid block,” and braced by 40,000 km of rebar.

… and structural engineering lead Leslie E. Robertson Associates summarizes design.

Burj Khalifa features 160 floors, a spiral shape to minimize upper-story wind torque, specialized glass, and heat-resistant glazed aluminum/stainless steel cladding on the outer walls.

One World Trade Center (2014) at 1776 feet, ranks seventh worldwide and tops the U.S.

And the current ‘ultimate project’ – LERA, in partnership with Chicago-based Kohn Pederson Fox, has the most ambitious proposal of all: a 5,700-foot “Sky Mile Tower” in Tokyo, twice as high as Burj Khalifa and burying every conceivable competitor.  The “vision” outline of the Sky Mile Tower.

A brief survey of tall-building record-holders and techniques:

Here’s a list of the world’s tallest buildings and their opening dates (or best estimates) if there isn’t a precise one available:

2010:	2,716 feet (Burj Khalifa, UAE)
2004:	1,666 feet (Taipei 101, Taipei)
1998:	1,482 feet (Petronas Towers, Kuala Lumpur)
1974:	1,450 feet (Sears Tower, Chicago)
1972:	1,368 feet (World Trade Center, New York)
1931:	1,250 feet (Empire State Building, New York)
1930:	1,046 feet (Chrysler Building, New York)
1913:	792 feet (Woolworth Building, New York)
1908:	612 feet (Singer Building, New York)
1901:	548 feet (City Hall, Philadelphia)
1311:	525 feet** (Lincoln Cathedral, UK)
~2550 BC:	481 feet (Great Pyramid, Egypt)

* Not counting free-standing towers like the 555-foot Washington Monument (1884) or the 986-foot Eiffel Tower (1889).
** Estimated including the original spire, which fell down in 1548.

Pyramids & Ziggurats: The 481-foot Great Pyramid outside Cairo held the world’s tallest record for 3,800 years. Not just a lame pile of rocks, the G.P. is a “smart pyramid” with a complex interior network of chambers, tunnels, and ventilation shafts meant for practical, religious, and perhaps astronomical purposes, all pointing to sophisticated though unrecorded architectural drafting and engineering techniques. The slightly younger ziggurats in neighboring Sumer and Akkad were made of brick, a squishier material which meant they couldn’t be as tall, and topped out around 170 feet. The Great Pyramid

Cathedrals: Designed without printing presses, standardized weights and measures, or mathematics beyond flat-plane geometry, cathedrals overtook pyramids in the 14th century.  As of 1900 they still made up all of the world’s top 20; and except for Philadelphia’s 548-foot City Hall (1901) they remain today the world’s tallest stone-on-stone buildings. Glaber on the 1000-AD cathedral boom.

… and the Ulm Munster, tallest existing cathedral.

Skyscrapers: Stone buildings can’t get much above 500 feet, since the weight of the upper tiers will crack the load-bearing pillars and walls beneath. Steel-skeleton buildings with curtain walls designed in Chicago and New York solved the problem. Meanwhile, the Otis hydraulic elevator system settled the 50-story-climb-to-the-top challenge, and architects set aside a few floors for water pumps so penthouse suites and executive offices could get toilets that flush and faucets that spout water rather than sucking air. Here’s the Empire State Building looking ahead to its 2031 centennial.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: U.S. economic growth greater than China and the EU combined this year.

THE NUMBERS: U.S. share of world GDP* – 

2024:	26.3%
2020:	25.0%
1980:	25.5%

IMF World Economic Outlook 2024, currency basis

WHAT THEY MEAN:

Two ways to count and divide “all the money in the world”:

One way is to ask: How much money do people make? And where are they making it? The International Monetary Fund’s beloved “World Economic Outlook” database, updated for 2024 last Thursday, reports that “World GDP”, having cleared the $100 trillion mark in 2022, hit $104.79 trillion in 2023 and will likely reach $109.53 trillion this year. (GDP on “currency basis”; see below for an asterisk and the alternative approach.) The WEO is particularly upbeat on the United States, noting that “the U.S. economy has already surged past its pre-pandemic trend” and continues to outpace its peers with a GDP jump from last year’s $27.4 trillion to $28.8 trillion. The U.S.’ projected $1.4 trillion nearly equals the $0.87 trillion the IMF’s forecasters project for China and the $0.67 trillion for the European Union combined.  To put this in less abstract terms, the $1.4 trillion in growth roughly equals (a) the total national output in the Spain/Saudi Arabia/Indonesia tier; or (b) the combined output of the six New England states, from the 1000 biotech firms and the 350 universities through Red Sox/Celtics/Bruins/Patriots merch, lobsters and maple syrup, Freedom Trail and foliage tour receipts, etc..  A table of the IMF’s growth forecasts for 2024:

World Growth 2024:	+$4.74 trillion
United States:	+$1.42 trillion
China:	+$0.87 trillion
European Union:	+$0.65 trillion
Latin America:	+$0.43 trillion
India:	+$0.36 trillion
ASEAN:	+$0.29 trillion
All else:	+$0.62 trillion

Assuming the IMF’s projections are pretty close to reality, this leave with U.S. with 26% of world output – up a point from the 25% share in 2020, and essentially the same as their 25.5% calculation for 1980. (Though still below the 30% reached at the peak of the 1990s boom.)  So, lots of changes this year and over time; but the various ups and downs of the last two generations seem to have left a division of output and income more stable than many might guess.

A second approach would be to ask:  How much money have they got? Credit Suisse, in its most recent “Global Wealth Report” (out last summer, with estimates for the year 2022) thinks there’s about $454 trillion in privately held “wealth” — that is, real estate, stocks, CDs, jewelry, cars, bank accounts, coins and bills, and so on — in the world.  About $140 trillion, or 31% of the total, is in the United States. By comparison, their 2012 report guessed at $241 trillion in world wealth, with $72 trillion or a basically equal 30% in the United States. As with GDP, though Credit Suisse’s reports begin only in 2010, the U.S.’ share looks pretty stable over time, while (as with GDP) the European and Japanese shares have drifted a bit down, and those of China and India up.

FURTHER READING

The IMF’s World Economic Outlook 2024 on global growth, pandemic recovery, risks, and more.

… and has some advice from IMF economists, trying their best to rain at least a little on the U.S.’ parade:

The strong recent performance of the United States reflects robust productivity and employment growth, but also strong demand in an economy that remains overheated. This calls for a cautious and gradual approach to easing by the Federal Reserve. The fiscal stance, out of line with long-term fiscal sustainability, is of particular concern. It raises short-term risks to the disinflation process, as well as longer-term fiscal and financial stability risks for the global economy.

… and the accompanying WEO Database has all the numbers.

And the promised *asterisk*: GDP measurements come in two versions. The “currency basis” method used above, which compares and adds up GDP based on value in U.S. dollars.  The alternative, “purchasing-power parities”, tries to figure the size of economies by assuming comparable prices for comparable goods and local services.

The currency-basis method makes the U.S. look a bit unreasonably strong, as the past year’s rising dollar magnifies the apparent U.S.’ growth relative to other countries.  Extreme cases include Japan and sub-Saharan Africa, where declines in currency value vis-à-vis the dollar produce supposed GDP “declines” of $100 billion in Japan and $34 billion in sub-Saharan Africa. In reality, the IMF guesses Japan’s economy will grow by 0.9%, and Africa’s by 3.8%. Using “purchasing-power parities” yields a less dramatic picture, in which Japan gets $210 billion in growth and Africa $340 billion, and the U.S.’ $1.4 trillion makes up a sixth of all world growth rather than a third.  Still a good year though.

U.S. government perspectives:

Treasury Secretary Janet Yellen on the economic outlook at home and worldwide.

The White House’s Council of Economic Advisers on U.S. employment and wage patterns.

… and also from CEA, the annual big-picture Economic Report of the President.

More from the WEO:

Some good news: IMF has Ukraine’s economy growing at 3.2%, after 5% in 2023, with Ukraine’s strategic defeat of Russia’s Black Sea fleet reopening grain and manufacturing trade.  The view from Kyiv.

Growth rates by country: The WEO’s growth estimate spectrum, from the four hottest economies to the four most troubled, has Guyana’s energy-driven 34% growth at the top, followed by Palau’s 12.4%, Niger’s 10.4%, and Senegal’s 8.3%; at the less happy pole are Kuwait’s -1.4%, Argentina’s -2.8%, Haiti’s -3.0%, and Sudan’s -4.2%.

Largest economies: The world’s ten largest economies (currency basis) are the U.S. at $28.8 trillion, China at $18.5 trillion, Germany $4.6 trillion, Japan $4.1 trillion, India $3.9 trillion, the U.K. $3.5 trillion, France $3.3 trillion, Brazil and Italy $2.3 trillion each, and Canada $2.2 trillion. Together they sum to $73 trillion, about two-thirds of world GDP. Among this group, India has the fastest-growing economy tiara at 6.8%, with China second at 4.7% and the U.S. third at 2.7%.

And how much is “all the money in the world”?:

Credit Suisse’s privately held “wealth” count doesn’t include the wealth held by governments — navies, buildings, national parks and public lands, state-owned enterprises, and so on. No estimate for this seems to exist, but the World Bank says the public-sector share of GDP worldwide is about 16.5%. This suggests a private-sector-wealth-to-private-sector-GDP ratio of about 5.2 to 1. If the public sector ratio is similar, world “wealth” would be somewhere around $550 trillion. If it’s larger, total wealth might be in sight of the $1 quadrillion mark. Credit Suisse counts wealth.

Or, how much actual cash is hanging around? The Federal Reserve reports about $2.25 trillion in U.S. paper cash, about a third of the $6.5 trillion in worldwide bills and coins reported by the Bank of International Settlements.  The “M2” “broad money” total, including bank accounts and CDs, is more like $21 trillion in the U.S., and based on the World Bank’s calculation of about 143% of world GDP, would be about $150 trillion worldwide. The Federal Reserve counts dollar bills.

… the World Bank matches cash and bank accounts against GDP.

… and the Switzerland-based Bank of International Settlements tallies $6.5 trillion in bills and loose change, and $7.5 trillion in daily currency exchange.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: U.S. life expectancy loss during the COVID-19 pandemic: -1 year for college-educated, -4 years for high school diploma or less.

THE NUMBERS: Largest drops in U.S. life expectancy, last 125 years –

1917-1918	-11.8 years
1902-1904	-3.9 years
1942-1943	-2.9 years
2019-2021	-2.4 years

WHAT THEY MEAN:

The first April edition of the Centers for Disease Control’s (CDC) Mortality and Morbidity Weekly is uncharacteristically upbeat. It reports that in 2022, American life expectancy rose by a year and a month, to 77.5 years from the 76.4 years of 2021, pushed u by falling COVID mortality, a two-year drop in homicide rates, and other factors. This jump, though, followed a loss of 2.6 years during the COVID-19 pandemic, from 78.8 years in 2019 to 77.0 in 2020 and then 2021’s 76.4. The two-year decline was America’s worst in the 80 years since World War II, and the fourth-worst in CDC’s records going back to 1900.

In international context, American’s overall pandemic life expectancy decline was sharp but not extraordinary. The World Bank reports a 2-year average life expectancy loss across the globe, and the actual difference might be less, since the Bank rounds to full years rather than using the CDC’s tenths.  But nonetheless, the overall U.S. level remains strange, disturbing, and low: Americans get two years less life expectancy than the Bank’s 80-year “high-income country” average, and seven years less than the 84 and 85 reported for Switzerland, Korea, Japan, and Hong Kong at the very top of the World Bank’s table. The U.S., meanwhile, is in a group near the top of the Bank’s middle-income bracket, a bit below the 79-year averages for Thailand, Chile, and the United Arab Emirates, and equal to China’s 78.

The temptation is to ask: Why is American life so short?  But this probably puts the question the wrong way.  The single 77.5-year U.S. national life-expectancy average conceals extreme variation — by place, by race and ethnicity, by gender, and by education – with some groups of Americans in the high-income tier, and others with life expectancy more like those of lower-middle income or even least-developed countries.  The COVID-19 pandemic loss likewise was not identical across the country, but magnified for some groups.  In particular, research by Anne Case and Angus Deaton shows that from 2019 to 2021, life expectancy fell by one year for college-educated Americans while plunging by four for their high-school-only neighbors. A more detailed look suggests both reasons for the disparities and the dramatically different effects of the pandemic: pre-existing health patterns and their effects; the lag in regions where state governments have not expanded Medicaid; and the poor crisis-era presidential leadership in 2020. As a point of departure, here’s a table of life expectancies at birth worldwide and in the United States, using the World Bank’s figures for countries and regions and CDC’s for American states and demographic groups:

Asian American women (2022)	86.3 years
Japan (2021, longest country life expectancy)	84 years
Hawaii (2020, longest U.S. state life expectancy)	80.7 years
High-income country average (2021)	80 years
Thailand (2021)	79 years
U.S. (2022)	77.5 years
U.S. (2021)	76.4 years
U.S. (2019)	78.8 years
Mississippi (2020, shortest U.S. state life expectancy)	71.9 years
World (2021)	71 years
Brazil (2021)	71 years
Mexico (2021)	70 years
Native American men (2022)	64.6 years
Haiti (2021)	63 years
Least-developed country average (2021)	62 years
Chad (2021, shortest country life expectancy)	53 years

 

With this in the background, a more precise question might be: Why are the lives of some groups of Americans so much shorter than others? Look closer:

States and regions: The CDC’s most recent state-by-state table covers 2020, a year into the pandemic decline. It reveals a gap of nine years between the lowest- and highest-expectancy states.  At the low end, Mississippi’s 71.9 years and West Virginia’s 72.8 resemble national figures for Peru, Armenia, Bangladesh, and Mexico.  More generally, life expectancies are shortest — 71 to 74 years — across the Deep South and Appalachia, whose international regional matches include the Middle East at 73 years and the Caribbean at 72. Hawaiians, the longest-lived Americans, have life expectancies equal to the 81-year expectancies in Germany and the U.K. Washington, Minnesota, California, Massachusetts, New Hampshire, Oregon, and Vermont are a bit lower, clustered around 79 years.  By region, the longest lifespans – the group between 78 and 81 years in 2020 – are in New England, the West Coast, and the Rocky Mountain West.  This doesn’t match the Japan/Switzerland/Hong Kong tier, but it is close to Western Europe, China, and Taiwan. A policy/social observation: in the regions with the lowest life expectancy, homicide rates are highest and governments are least likely to have expanded Medicaid eligibility.

Race/gender/ethnicity: U.S. life expectancy varies even more widely by race, gender, and ethnicity than by geography.  Dividing the population this way yields a life-expectancy range of 23 years, within sight of the 32-year spectrum dividing the world’s shortest-lived country (Chad at 53) from its longest-lived (Japan at 84). The 11 million Asian-American women now have a life expectancy of 86.3 years, longer than any of the 228 countries and territories in the World Bank’s tables. (But still a shade below the 87 years for women in Japan.)  The 2.5 million Native American men are the shortest-lived group with a life expectancy of 64.6 years — barely above the 64-year average across the UN’s least-developed countries and Haiti’s 63 years, even with a two-year rebound from the 62.2 years in 2021. Between these poles, life expectancy in 2022 was 84.5 for Asian Americans; 80.0 for American Hispanics; 77.5 for non-Hispanic white Americans, mirroring the national average; 72.8 for African Americans; and 67.9 for Native Americans. In each case, women on average outlived men, by four to seven years.

Education level: Finally, using a somewhat different approach — healthy life expectancy at 25, as opposed to at birth — Americans with college degrees can expect nine years more life than Americans with high school diplomas or less. This gap widened sharply during the COVID pandemic, when (measuring from 2019 to the 2021 low), high-education Americans lost one year of life expectancy and non-college Americans four years. Three contributors to this sudden widening of the gap:

(a) Pre-existing vulnerabilities: Pre-COVID risk indicators show that less educated people were more vulnerable to a pandemic to begin with. Obesity and smoking rates, for example, are 36% and 28% among Americans with less than a college education, as opposed to 28% and 6% for college graduates.

(b) More exposed during the pandemic: Differing pandemic-era work patterns left working-class people more exposed.  Workers in many upper-education careers — law firms, financial services, universities, high-level civil service, business managers – were often able to work from home in relative safety.  Blue-collar workers — bus drivers, security guards, janitors, food-manufacturing workers, grocery store stockers and cashiers — by contrast were more likely to work on-site, and so were in greater danger.

(c) Poor presidential leadership: COVID vaccination rates were lower among non-college Americans — a 2023 NIH review shows 79% vaccination rates for college graduates and 49% for high school diploma or less – making infection more dangerous for this group. This suggests that less educated people, in particular, those attracted to “populism,” may have been more susceptible to anti-vaccination propaganda and premature de-masking, and more likely to be misled by Mr. Trump’s erratic and perhaps panicky oscillation between vaccine advocacy and flirtation with pseudo-remedies such as irradiation and animal medicines.

With this in the background, America’s low life expectancy seems less a general national problem than an acute issue concentrated in specific regional and demographic groups, and influenced both by state-level policy and crisis leadership. So reading the Morbidity and Mortality Weekly offers a mix of reassurance about recovery from the pandemic, sadness about poor choices, and longer-term hope that the country’s record can in principle get better.

FURTHER READING

Overall:

CDC’s take on 2022, in the April 4th Mortality and Morbidity Weekly.

And the World Bank’s life expectancy by country/region/world, mostly through 2021.

More detail:

CDC’s report on 2021, from National Vital Statistics’ November 2023 release.

… State-by-state life expectancy from 2018 to 2020.

… and a map of obesity prevalence correlates fairly closely with state life expectancy.

The National Institutes of Health report on vaccination rates, including by education.

Anne Case and Angus Deaton, writing for the Brookings Institution last year, highlight the life expectancies gaps separating college-educated from high-school-only Americans, and the COVID-era plunge for the latter.

Long-term perspective:

The CDC’s figures over the past 125 years show life expectancy at a dismal 47 years in 1900.  (No vaccinations, no blood transfusions in accidents, no antibiotics or anti-inflammatory medicines, infant mortality at 157 deaths per 1,000 births as opposed to today’s 5.5.).  Having risen to 54 by 1916, this crashed back down to 39 in 1918 — easily the worst event in the CDC’s statistical records, reflecting the 126,000 AEF soldiers killed in spring and summer World War I campaigns, and the 675,000 dead in that autumn’s Spanish Flu epidemic. Rebounding in the early 1920s, life expectancy reached 60 years by 1930 and 66 by 1941, then fell back to 63 in 1943. (Meaning the COVID pandemic’s impact was close to that of World War II.) The 70-year mark comes in 1960, after which life gets steadily longer for 50 years — 71 years in 1970, 74 in 1980, 75 in 1990, 77 in 2000, and 79 in 2010.  Then came a plateau till 2019, followed by the 2.4-year drop to 2021 and the 2022 rebound. The CDC’s long view.

And the longest-lived country:

Asahi Shimbun on Japanese life expectancy, also slightly down during the pandemic.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: Tariff revenue in FY2023: $80 billion. Reps. Fletcher and Pettersen have some very good questions about who is paying this money.

THE NUMBERS: Tax revenue by source, Fiscal Year 2023* –

Tariff system:	$80.3 billion
Fuel tax for trust fund:	$42.2 billion
Estate and gift tax:	$33.7 billion
Tobacco excise tax:	$10.3 billion
Alcohol excise tax:	$9.5 billion

* Office of Management and Budget

WHAT THEY MEAN:

Who says Congress has no room for creative thinking? For fresh approaches to tired debates? Or for starting a project by seeking reliable facts and data first? Well, a lot of people might say those sorts of things. But here are Representatives Lizzie Fletcher (D-Texas, and Chair of the New Democrat Coalition’s Trade Task Force) and Brittany Pettersen (D-Colo.), proving them wrong today as they introduce a bill entitled the “Pink Tariff Study Act”. Their bill directs the Treasury Secretary to review the American tariff system — likely for the first time in 70 years — for gender bias, regressivity, and impact on different types of American households.  Some background and significance of their idea:

Congress has two “trade policy” powers: (1) to “regulate commerce with foreign nations”, and (2) to “lay and impose Taxes, Duties, Imposts and Excises.” For nearly a century — since the New Deal-era Reciprocal Trade Agreements Act began America’s series of tariff-reducing and trade-opening agreements in 1934 — arguments over trade and trade policy have revolved mainly around imports, export opportunities, and in general the first power. For the first 150 years of U.S. history, though, it was mostly the opposite, with Congressional debates focused on the tariff system’s role as one of the major federal taxes. Though this aspect of tariff policy hasn’t recently got much attention, tariffs remain one of the seven major federal taxes, and are by no means the smallest. The Office of Management and Budget reports that in the last “Fiscal Year” — October 2023 to September 2024 — CBP officers collected over $80 billion in tariff money, nearly as much as their Treasury colleagues got from all the taxes on inheritances, gasoline, liquor, and tobacco put together.

Who exactly is paying this $80 billion?  Is the division of payment fair?  Has anyone recently looked systematically through the 11,414 tariff lines to see what the rates are?  PPI’s work over the past year has done some of this, noting with dismay that the tariff system taxes women’s clothes more heavily than men’s, taxes cheap stainless steel spoons more than sterling silver, and so on.  Some academic economists have done similar work — three excellent examples below — and independent modelers have examined Trump-era tariffs on metals and Chinese goods.  But Congress and executive branch agencies, whose respective jobs include setting all these thousands of tariff rates and collecting the billions of dollars, haven’t looked in a long time. Congress’ last hearing on this system dates to the early 1970s; the Treasury Department’s last review is of uncertain date but probably during the Eisenhower presidency.

In this sense, the tariff system is like an old tax policy room boarded up decades ago, and not checked since for termites, dry rot, etc. Except that it takes in lots of money: $12 billion on clothes, $3 billion on shoes, $8 billion on electronics, and so on. Extending the metaphor, Reps. Fletcher and Pettersen are asking the Treasury Department to open the windows, air the room out, and look at what’s inside.  Their bill is simple, hopefully non-controversial, and intended to seek information on four questions:

*    Is the tariff system biased by gender, for example with respect to clothing?
*    Is it a regressive tax, falling more heavily on lower-income families than on wealthy households?
*    How does the tax burden it imposes fall by gender, household type, and income level?
*    Are there other ways in which it might impose unequal taxation?

So:  Reps. Fletcher and Pettersen are posing simple and important questions and demonstrating a well-founded concern for fairness and equity in taxation.  And as they do, they are answering cynics with an example of Congressional policymaking which based on values, informed by data and analysis, and meant to do some good.

FURTHER READING

Reps. Fletcher and Pettersen introduce the Pink Tariff Study Act.

And the New Democrat Coalition release explains.

… and for some backstory, the NDC’s Trade Task Force, chaired by Rep. Fletcher, pledges last November to address gender bias and regressivity in the tariff system in their 2023 Trade Agenda.

Tax background:

OMB’s historical tables for spending, tax, and more.

Treasury Department’s Office of Tax Analysis reviews five categories of taxes — income, payroll, corporate income, estate, and a combined “excises and duties” column — for distributional impact.

Tariff system background:

And the U.S. International Trade Commission has the actual, 11,414-line-plus-special-programs U.S. tariff schedule.

PPI’s Elaine Wei and Ed Gresser on the gender bias of U.S. clothing tariffs.

… and the apparently inexplicable, but actually very typical, case of spoon tariffs (with a cameo by Secretary Yellen’s long-ago predecessor, the late Albert Gallatin, explaining in retirement (1833) why tariff systems are more likely than other taxes to evolve toward regressivity).

The University of Wisconsin’s Lydia Cox and Federal Reserve economist Miguel Acosta (February 2024) on the regressivity of tariff policy, its origins, and the potential pro-poor impact of reform.

The ITC’s staff paper (2018) on gender impacts and regressivity.

And Obama-era Council of Economic Advisors eminences Kathryn Russ, Jay Shambaugh, and Jason Furman reach similar conclusions.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: The Port of Baltimore handles 10% of U.S. vehicle trade and 94% of Ethiopian birdseed imports.

THE NUMBERS: Arrivals of Ethiopian “noug” imports, 2023 –

Port of Baltimore:	7,095 tons
Port of New York:	429 tons
All other:	6 tons

 

WHAT THEY MEAN:

Last week’s destruction of the Key Bridge over the Patapsco River, after the 300-meter container ship Dali lost power and collapsed the main pier, closes the Port of Baltimore except for a temporary channel allowing barges and tugboats to enter and leave. The accident’s direct impact on the city’s economy will pretty certainly be its most important economic effect, and the loss of six construction workers’ lives its central human impact. The event also, though, is a bit of a stress test for American “supply chain resilience,” given Baltimore’s place as a large and especially versatile seaport. Some data, and a small-scale illustration of the way these events can touch people close to home and very far away:

America’s annual maritime commerce flows total, per NOAA, 2.3 billion tons of cargo and a symmetrical $2.3 trillion worth of trade. These big numbers, equivalent to about 8% of GDP and 43% of all U.S. trade flows, are distributed across 208 American ports handling over 250,000 tons of cargo a year. (With some left over for another 100 or so smaller border-crossings.) Baltimore’s 308-year-old port ranks in the top 25 on three different metrics — total cargo flow, dry bulk, and container transits — and handles about 2500 ship calls a year, with 50 million tons of cargo valued at $80 billion. Its particular specialization is automotive trade, with 750,000 annual incoming and outbound vehicles, but like other big ports it manages a very wide spectrum of consumer goods, natural resources, farm products, and more.  As the wrecked Dali continues to block most ship transits, groups accordingly reworking their logistical arrangements range from manufacturers of half the 10,000 tractors Americans sell to Australian farmers and miners each year; to executives in electronics and automotive plants using the port for half of the U.S.’ 10,300 tons of matte cobalt arriving from Norway, Japan, and Madagascar annually; and on to garden-shop operators buying seed for nesting bluebirds and goldfinches this spring. A bit more on this last:

The relevant seed — known as Guizotia abyssinica to botanists, “noug” to Ethiopian farmers, and “niger seed” or the trademarked “Nyjer” for garden supply stores — is a small, thin black seed produced by a bright yellow flowering plant.  Native like coffee to upland Ethiopia, noug has been harvested on the plateau for millennia as a source of cooking oil, with “a nutty flavor and pleasant odour and outraking sesame as Ethiopia’s most widely cultivated oilseed.  About 800,000 upland farmers in Amhara and Oromia grow and harvest 300,000 tons each year.  Biologically, its small size and high oil content make it attractive to popular and brightly colored U.S. songbirds such as the goldfinches and indigo bunting (reasonably but not precisely considered a bluebird*), millions of which will fly in from their winter homes in Mexico and the Caribbean for nesting this week. Hoping to attract them to backyard feeders, American bird enthusiasts purchase about 15,000 tons of noug from garden-shop operators for the past two decades. An Addis Ababa correspondent explains:

“Ethiopia uses the Niger seed for oil extraction for human consumption/cooking oil.  A few years back some traders from Singapore, USA and Europe discovered the availability of this product and started to buy from Ethiopian exporters and ship it to the USA buyers.  These USA buyers are major traders, by number not more than eleven.  They have become the target for whomever wants to sell the Niger seed…  We hear that Niger seed goes to the USA market for bird feed, which really amazes us because we know the product as for human consumption only.”

Exporting firms in Addis Ababa buy it from farmers in the field, sterilize and bag the seeds in 50-kilo sacks, and carry the sacks by truck or (since 2018) by rail to the Djibouti port — Baltimore’s partner in noug trade and the busiest Horn of Africa port. Last year’s exports earned Ethiopia $9.4 million. About 40% of each year’s annual shipments arrive in April and May, and about 94% of it — 7,095 of 7,530 tons last year — crosses Baltimore’s dry bulk dock.  Shippers and garden shops are presumably looking hard for new paths, with their success — like that of their counterparts in autos, electronics industries, coal, metals, and more — one small test of the American economy’s flexibility and “resilience,” as well as something important in its own right for the livelihoods of East African farmers and this spring’s bluebird nesting.

* Ornithologically, the eastern U.S. is home to two bright-blue birds, the indigo bunting and the “bluebird” per se. Male buntings are blue all over and females a more modest brown; among bluebirds, both males and females are blue (though females are more grayish-blue), with a brownish breast. Current population counts estimate about 75 million buntings and 23 million bluebirds.

FURTHER READING

Ports:

The Port of Baltimore.

… Mayor Scott updates Baltimoreans.

NOAA summarizes U.S. port stats.

The Department of Transportation looks at 2024 U.S. port performance.

… focuses in on Port of Baltimore.

… and outlines what’s next in Bipartisan Infrastructure Act port investment.

Wreck:

Ship tracker “Vesselfinder” has basics – size, deadweight tonnage, previous port calls – on the Dali.

Auto industry execs predict that they can manage the port closure without too much trouble.

Noug and Buntings:

The Ethiopian Pulses, Oilseeds, and Spices Processors Exporters Association pitches Ethiopian specialty produce exports.

USDA on the Ethiopian oilseed economy.

Oregon State University explains Ethiopia’s status as one of the world’s eight “Vavilov Centers”, with especially diverse crops.

NIH evaluates noug and its nutritional benefit.

The Audubon Society explains its appeal to birds.

… and updates you on the relatively healthy indigo bunting population.

And the Port Authority of Djibouti, including a look at the 2018 opening of a rail link to Addis financed by the Djibouti and Ethiopian governments and the Chinese Ex-Im Bank.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.