China is accounting for a smaller percentage of U.S. imports than at any time since 2008, hit by a one-two — or, some would say, one-two-three — punch.
Consequently, it is likely to finish as the nation’s third-ranked trade partner for the second time in three years, after finishing first in 2015, 2016, 2017, 2018 and 2020.
This is the third in a series of columns focused on each of the United States’ top 10 trade partners. I previously wrote a column about Mexico, currently the nation’s top-ranked trade partner, and Canada.
Yet to come are posts on No. 4 Japan, No. 5 Germany, No. 6 South Korea, No. 7 United Kingdom, No. 8 Taiwan, No. 9 India and No. 10 Vietnam. These 10 account for two-thirds of all U.S. trade, with just the top three at better than 43%.
I wrote a similar series of columns about the nation’s top 10 ports — the top-ranked Port of Los Angeles, Chicago’s O’Hare International Airport, Port Laredo in Texas, New York’s JFK International, the Port of Newark, the Port of Houston, Detroit’s Ambassador Bridge, Los Angeles International Airport and the Port of Savannah.
All are based on my analysis of U.S. Census Bureau data.
The first punch was tariffs on some $350 billion in Chinese imports imposed by former President Donald Trump, tariffs which remain in place under President Biden. Trump’s initial complaint was persistent and massive U.S. trade deficits with China but went on to include theft of intellectual property and forced sharing of proprietary technology.
The second punch was the global Covid-19 pandemic, which began in the spring of 2020. In international trade, that has led to numerous port and manufacturing plant closures in China, where the virus originated, as well as elsewhere.
The third punch, and this one is according to murmurs in the trade community, is China masking what are essentially Chinese goods by either altering country of origin labeling or shifting some aspect of assembly, all to avoid those tariffs.
As evidence, circumstantial though it might be, critics point to the fact that despite those massive tariffs, despite the decrease in U.S. imports from China, the nation’s overall imports are in record territory (and stuck in the water outside the twin ports of Los Angeles and Long Beach).
It’s why I predicted in a post earlier this year, with just six month of data, that the U.S. trade deficit would almost certainly top $1 trillion for the first time in 2021. It also calls into question whether tariffs are effective.
Despite the decline in U.S. imports from China, thanks to record U.S. exports to China, it will narrowly miss topping its all-time record for overall U.S. trade narrowly.
Through the first 10 months of 2021, the most recent data available, U.S. exports to China topped $121.61 billion, $100 billion less than totals for either Mexico or Canada, but still an improvement of 38.75% over the 2019 total for the first 10 months, when Trump and President Xi Jinping were entangled in a tariff war that was engulfing U.S. soybeans, oil and other commodities — and neither had yet heard of Covid-19.
On the import side, inbound shipments are up a less substantial 7.49% when compared to the October 2019 YTD figures. Consequently, the U.S. trade deficit with China is like to be the lowest total since 2014, excluding 2020. While it will still be three times the size of the deficit with Mexico, it was about five times greater in 2018.
At the moment, it appears the 2021 total for U.S. trade with China will be the second-greatest total on record, trailing only the pre-tariff, pre-Covid 2018 total.