Markets
The U.S. States Most Vulnerable to a Trade War
The U.S. States Most Vulnerable to a Trade War
Last year, nearly $4 trillion of U.S. economic productivity was the result of international trade.
However, with talk of a trade war heating up, there is a real possibility that the global trade landscape could shift dramatically over the coming months and years.
Any such shifts wouldn’t likely impact the country in a uniform and evenly distributed fashion – instead, any impending trade war would pose the largest direct risk to states that are dependent on buying and selling goods on international markets.
The States Most at Risk
Today’s visualization comes to us from HowMuch.net, and it shows every U.S. state and district organized by GDP size, as well as percentage of GDP resulting from international trade.
Here are the 10 states most reliant on international trade:
| Rank | State | GDP (2017) | Exports + Imports (2017) | Trade (% of GDP) |
|---|---|---|---|---|
| #1 | Michigan | $515 billion | $200 billion | 38.9% |
| #2 | Louisiana | $243 billion | $94 billion | 38.7% |
| #3 | Kentucky | $204 billion | $78 billion | 38.1% |
| #4 | Tennessee | $345 billion | $112 billion | 32.6% |
| #5 | South Carolina | $219 billion | $70 billion | 31.9% |
| #6 | Texas | $1,692 billion | $527 billion | 31.2% |
| #7 | Indiana | $360 billion | $92 billion | 25.7% |
| #8 | Washington | $503 billion | $127 billion | 25.3% |
| #9 | New Jersey | $589 billion | $147 billion | 25% |
| #10 | Illinois | $818 billion | $201 billion | 24.6% |
On a percentage basis, Michigan tops the list with 38.9% of the state’s GDP reliant on international trade.
The Lowest Risk States
On the flipside, here are the states or districts with less to lose in the event of a trade war.
| Rank | State (or District) | GDP (2017) | Exports + Imports (2017) | Trade (% of GDP) |
|---|---|---|---|---|
| #51 | District of Columbia | $132 billion | $2 billion | 1.5% |
| #50 | Wyoming | $41 billion | $2 billion | 5.0% |
| #49 | South Dakota | $49 billion | $3 billion | 5.1% |
| #48 | Hawaii | $88 billion | $5 billion | 5.4% |
| #47 | New Mexico | $98 billion | $6 billion | 6.0% |
| #46 | Oklahoma | $190 billion | $15 billion | 8.0% |
| #45 | Colorado | $341 billion | $28 billion | 8.1% |
| #44 | Virginia | $511 billion | $46 billion | 8.9% |
| #43 | Nebraska | $119 billion | $11 billion | 9.1% |
| #42 | Maine | $61 billion | $6 billion | 9.7% |
Washington, D.C. tops the list, with only 1.5% of its regional GDP tied to trade.
This makes sense since The District’s economy is mostly linked to the government, service, and tourism sectors. Nearby Virginia also has surprisingly little international trade, at just 8.9% of its economy.
Want to see more on international trade? See the numbers behind the world’s closest trade relationship in this infographic.
Markets
The European Stock Market: Attractive Valuations Offer Opportunities
On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?
European Stock Market: Attractive Valuations Offer Opportunities
Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.
The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.
Attractive Valuations
Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.
| Index | Price-to-Earnings Ratio | Price-to-Book Ratio |
|---|---|---|
| EURO STOXX 50 | 14.9 | 2.2 |
| STOXX Europe 600 | 14.4 | 2 |
| U.S. | 25.9 | 4.7 |
| Canada | 16.1 | 1.8 |
| Japan | 15.4 | 1.6 |
| Asia Pacific ex. China | 17.1 | 1.8 |
Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.
On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.
Research also shows that lower price ratios have historically led to higher long-term returns.
Market Movements Not Closely Connected
Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.
The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.
| EURO STOXX 50 | STOXX EUROPE 600 | U.S. | Canada | Japan | Asia Pacific ex. China |
|
|---|---|---|---|---|---|---|
| EURO STOXX 50 | 1.00 | 0.97 | 0.55 | 0.67 | 0.24 | 0.43 |
| STOXX EUROPE 600 | 1.00 | 0.56 | 0.71 | 0.28 | 0.48 | |
| U.S. | 1.00 | 0.73 | 0.12 | 0.25 | ||
| Canada | 1.00 | 0.22 | 0.40 | |||
| Japan | 1.00 | 0.88 | ||||
| Asia Pacific ex. China | 1.00 |
Data is based on daily USD returns.
European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.
Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors.
Tracking the Market
For investors interested in European equities, STOXX offers a variety of flagship indices:
| Index | Description | Market Cap |
|---|---|---|
| STOXX Europe 600 | Pan-regional, broad market | €10.5T |
| STOXX Developed Europe | Pan-regional, broad-market | €9.9T |
| STOXX Europe 600 ESG-X | Pan-regional, broad market, sustainability focus | €9.7T |
| STOXX Europe 50 | Pan-regional, blue-chip | €5.1T |
| EURO STOXX 50 | Eurozone, blue-chip | €3.5T |
Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.
The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.
“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”
— Axel Lomholt, General Manager at STOXX
Partnering with STOXX to Track the European Stock Market
Are you interested in European equities? STOXX can be a valuable partner:
- Comprehensive, liquid and investable ecosystem
- European heritage, global reach
- Highly sophisticated customization capabilities
- Open architecture approach to using data
- Close partnerships with clients
- Part of ISS STOXX and Deutsche Börse Group
With a full suite of indices, STOXX can help you benchmark against the European stock market.
Learn how STOXX’s European indices offer liquid and effective market access.
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