US Trade with China has Suffered a $160 Billion Deficit Due to 7-Year Trump-Biden Tariffs
Revisiting the brunt of seven years of trade tensions with China, it appears that U.S. exports to China have seen a conservative decline of $160 billion, with estimates reaching as high as $201 billion based on my analysis of U.S. Census Bureau data.
This analysis offers some insight into the misstep taken by the world's second-largest economy and the United States' third-largest trade partner, helping us better understand the response they might have to an intensified trade dispute.
Since President Trump imposed tariffs on China back in 2018, U.S. exports to China have increased by a sluggish 10.42% up until the departure of former President Biden. In contrast, U.S. exports to the rest of the world saw a robust surge of 33.44%. If U.S. exports to China had maintained the worldwide average growth, it would have yielded an extra $159.92 billion in exports to China.
With the seven-year period before the trade war (2010-2017) in mind, it is likely that U.S. exports to China would have grown even further, totaling an estimated $201.50 billion in additional exports.
Dive into the commodities that fared poorly and excelled during the seven years of tariffs to gain a glimpse of the potential consequences should the United States and China continue down a path of trade escalation rather than deescalation or maintaining the status quo.
When weighing the impact on imports from China, it's fair to say they have taken a heavy hit, with declines totaling as much as $772.90 billion. Some might interpret the decline in U.S. exports to China as 'collateral damage,' a term often used in warfare.
Yet, others would argue that the decline in U.S. exports isn't as significant as it seems, that China is manipulating the "country of origin" labeling. This argument is supported by the uptick in U.S. imports from Vietnam, Taiwan, Japan, and other countries, corresponding to declines in specific Chinese commodities.
Interestingly, though U.S. imports from China have plummeted, they have not dragged down the overall U.S. trade deficit, which continues to grow, reaching a staggering $1.20 trillion in 2024. Despite the drop in trade with China, U.S. trade overall surpassed the $5 trillion mark in 2024, underscoring its resilience.
As for specific commodities that have taken a nose dive, we find that U.S. soybean exports to China are down 33.97% from the first quarter of 2017, over twice the decline in overall U.S. soybean exports. Passenger vehicle exports to China have seen a staggering 76.54% decline, translating to $1.8 billion lost in revenue from Q1 2017 to Q1 2022.
Similar trends can be observed in oil shipments, scrap metal, paper, and steel, where the majority of exports to China have faltered, while exports to other countries have fared better.
On the flip side, there have been winners in the trade war, commodities that have thrived during this period, helping U.S. exports overall to increase by 8.18%. Key winners include civilian aircraft and parts, vaccines, medical instruments, and computer chips.
In essence, the ongoing trade war with China has severely impacted Chinese imports and caused difficulties for U.S. exports. Nonetheless, the United States' trade deficit remains substantial, hinting at the complex nature of the economic relationship between these two economic powerhouses.
- Despite the decline in U.S. exports to China during the trade war, some commodities such as civilian aircraft and computer chips have thrived, contributing to the overall increase in U.S. exports by 8.18%.
- If the United States and China continue down a path of trade escalation, the potential consequences could be more apparent in commodities like soybeans, passenger vehicles, oil, scrap metal, paper, and steel, which have seen significant declines in exports to China.
