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After North Korea’s latest nuclear threat, President Donald Trump threatened to cut off all US trade with any country that does business with the rogue nation.
“The United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea,” he tweeted Sunday.
Though highly unlikely to happen, that option would be nothing short of a total disaster for the US economy and the greater global economy as a whole.
Many countries have trade relations with North Korea at some level. While China dominates the trade market with North Korea, a number of other prominent US trading partners have a minimal economic relationship with the country.
At least 10 of the top 30 trading partners of the US do some level of business in North Korea. Those 10 nations include five of the top 10 US trading partners, and two of those are in the top three. Ending all trade with those nations would lead to the halting of roughly $1.6 trillion in total trade, according to 2016 data, and of more than $520 billion in US exports.
China, the nation Trump appeared to be most closely calling out in the tweet, is the largest US trading partner, with roughly $600 billion in trade happening between the two countries on an annual basis. Other countries that would be affected by such a move include India, Mexico, Saudi Arabia, Chile, Brazil, France, Germany, Thailand, and Russia. 2015 data showed that those countries were importing goods such as silver, fork-lifts, and computers from North Korea while exporting pesticides, felt machinery, and sculptures.
With those consequences obvious, the threat hasn’t been taken too seriously.
“We think there is little prospect of Trump carrying out his threat to ‘stop all trade with any country doing business with North Korea’ given that the US imported $479 [billion] of goods and services from China last year,” international economist Andrew Kenningham wrote Tuesday in a Capital Economics note.
“But as 86% of North Korea’s exports go to China, the US may impose additional targeted sanctions on Chinese entities and individuals which are doing business with North Korea. This in turn could provoke some retaliation from Beijing.”