US-China Trade Turns Back Down

During the summer of 2024, the volume of goods traded between the U.S. and China saw an increase after a 21 month-long plunge because of the Biden-Harris administration’s anti-free trade actions. The value of goods exchanged between the U.S. and China had started to stabilize, but the Biden-Harris administration rolled out new and expanded tariffs intended to keep their decline going. Some of those new tariffs would take effect in August 2024, while others would wait until January 2025.

The threat of those new sanctions prompted those engaged in importing goods from China to try to beat the clock on the new tariffs. Their efforts lead to a short-lived increase in the volume of goods traded between the two countries. That drive was led by U.S. importers, who sought to ship as many Chinese-produced goods subject to the new and expanded tariffs into the U.S. before the tariffs went into effect and made the goods more costly.

The increased volume of trade aimed at avoiding the new tariffs lasted through September 2024. As of October 2024, the decline in U.S. imports of Chinese goods has resumed. The following chart shows that development:

More remarkably however, U.S. exports to China plunged during October 2024. A large portion of that decline is attributable to a seven-week long strike by Boeing mechanics, which effectively shut down U.S. exports of commercial aircraft. The negative impact to U.S. exports to China can be seen in the next chart, which tracks the year-over-year growth rate of China’s exports to the U.S. and U.S. exports to China:

The decline in U.S. exports to China is also remarkable because it occurred during the annual seasonal ramp-up of soybean exports to the country. Chinese importers were racing to ship as many soybeans as they could in October 2024, ahead of when they anticipate the Chinese government will impose retaliatory tariffs on U.S.-produced goods in 2025.

The Boeing strike ended on 5 November 2024, but the company only delivered a total of 13 jets to its customers during the month, so we anticipate U.S. exports to China will remain strike-depressed when November’s trade data is reported.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 5 December 2024.

Image Credit: A harbor filled with lots of large cranes. Photo by Weichao Deng on Unsplash.