The United States has a small population, so why is the market so big that as long as tariffs are increased, countries around the world are afraid?

In recent times, the US tariff stick has been waving its willful force, which has caused many concerns among countries. In order to avoid being raising tariffs, many countries have gone to the United States to plead for mercy, hoping that the United States can let itself go.

The United States has a population of more than 300 million, but compared with large population countries such as China and India, it is actually quite small. But why do countries around the world feel very nervous as long as the United States announces an increase in tariffs?

The US economic size is only one aspect. As the world's largest economy, the reason why the US can scare people with tariffs every time is mainly because the US market is too large, so large that many countries cannot do without it.

So, the question is, why is the US market so big? After all, according to our general understanding, the more population the bigger the market, the bigger the market. Although the population of 300 million is indeed a large number, it can only be at the average level compared with large population countries such as China and India.

The first reason for this is that it is related to the economic structure of the United States. The primary industry in the United States, namely agriculture, forestry and fishery, accounts for a very low proportion of GDP, and has remained below 1% in recent years. The proportion of the US secondary industry accounts for about 18% of GDP. If we subdivided it, manufacturing accounts for about 10%.

The tertiary industry in the United States, that is, the service industry including finance, technology services, entertainment, education, etc., is the pillar of the United States' economy, accounting for about 80% of GDP.

One of the characteristics of the service industry is that it can accommodate a large number of employment, and then employment drives demand and promotes consumption. The more developed the service industry is, the higher the consumption power, the more active the market will be, and the more demand for products will be. Consumer spending accounts for 70% of all activities, and the scale of personal consumption expenditure in the United States is about US$18 trillion.

At the same time, because the proportion of agriculture and manufacturing in the United States is very low, many products cannot be produced and cannot be "self-sufficiency", so it requires a large amount of imports.

Data shows that in 2024, the total US international trade deficit was US$918.4 billion, an increase of US$133.5 billion from US$784.9 billion in 2023. The total export volume of the United States was US$3.19 trillion, an increase of US$119.8 billion over 2023; the total import volume was US$4.11 trillion, an increase of US$253.3 billion over 2023.

That is to say, the United States imports $4.11 trillion in goods from abroad every year, which is fatal attraction to any country.

If the $4.11 trillion data is not intuitive enough, you can understand more clearly with an example. In 2023-2024, India's total imports of goods were US$678 billion, while India's population exceeded 1.4 billion.

India's population is about 4.5 times that of the United States. If you convert it, India's per capita consumption of imports is only 3.6% of the United States. Through this data comparison, we should clearly know how big the US market is.

The reason why Americans' consumption power is so high is closely related to the status of the US dollar. The US dollar accounts for 59% of global foreign exchange reserves and accounts for more than 40% of international trade settlements. The United States can exchange physical goods by exporting US dollars, forming a cycle of "USD → commodity → USD return".

In addition, US companies retain more than US$3 trillion in overseas profits, and through tax incentives, they promote funds to flow back and supplement domestic purchasing power. What provides these support to American companies is that the United States dominates the fields of high technology, financial services, intellectual property, etc.

To give the simplest example, for every iPhone sold in China, only about 3.6% of the profits belong to China's assembly plants, while Apple earns 58.5% of the profits.

Because the US market is extremely large, companies from other countries are scrambling to enter, hoping to make profits from this market. The United States has also seized this point and has been constantly putting pressure on other countries by wielding the tariff stick.