Category Archives: trade

U.S-China Trade Grows Faster in July 2022

After a rocky first half of 2022, particularly for China's economy, the value of goods traded between the the U.S. and China increased year-over-year during July 2022. That change can best be seen in the following chart, which tracks the growth rate of exports from the U.S. to China and imports from China to the U.S. from January 1986 through July 2022.

Year Over Year Growth Rate of Exchange Rate Adjusted U.S.-China Trade in Goods, January 1986 - July 2022

The increased activity corresponds with improvements in China's domestic economy, which is being held back by its leaders' ongoing series of COVID lockdowns in major cities within the country. Unfortunately, this improvement falls in between the lifting of COVID lockdowns in some regions in June 2022 and the government-mandated imposition of new lockdowns in other regions in late August and early September 2022.

Despite the Chinese government's ongoing disruptions to its economy from its zero-COVID policy, which indicate the country's leaders have little confidence in Chinese hospitals' ability to handle new coronavirus infections, the combined value of goods traded between the U.S. and China now exceeds a counterfactual projection based on the recovery in trade between the two countries after 2008-09's "Great Recession".

Combined Value of U.S. Exports to China and U.S. Imports from China, January 2017 - July 2022

That achievement comes with an asterisk. The latest trade data reflects nominal dollar values that are not adjusted to account for the effect of inflation, where the real volume of goods transacted between the U.S. and China in 2022 falls below the physical volume of goods recorded at identical dollar values in 2018.

Looking forward, we're coming up on the time of year when China's exports to the U.S. peak as it ships the bulk of goods that will be sold to U.S. consumers during the Christmas shopping season and U.S. exports to China peak with the export of soybeans in the months of September through November. Because of these seasonal factors, we anticipate the combined value of trade between the U.S. and China will outpace the counterfactual's projection during the next several months.

References

U.S. Census Bureau. Trade in Goods with China. Last updated: 7 September 2022. Accessed 7 September 2022.

U.S-China Trade Shows Nominal Improvement in June 2022

After a full year of underperforming a counterfactual based upon the "Great Recession" trade recovery, the post-pandemic trade recovery between the U.S. and China has finally caught up to that projection in terms of current, or nominal, U.S. dollars.

Year Over Year Growth Rate of Exchange Rate Adjusted U.S.-China Trade in Goods, January 1986 - June 2022

Digging into the trade data, we found the basis for that improvement is rather lopsided. Most of the improvement in recent months has been paced by double digit year-over-year growth in the value of good imported into the U.S. from China. By contrast, growth in the value of goods exported by the U.S. to China has been much slower and nearly flat on average.

Much of this lopsided outcome is the result of clearing a good portion of the backlog of container ships that stacked up outside west coast U.S. ports in late 2021.

None of the trade data we've presented has been adjusted to account for President Biden's inflation. There's little question that in real terms, the post-pandemic trade recovery between the U.S. and China has some way to go before catching the counterfactual in real terms. Which is to say the U.S. is paying much more to import fewer things from China.

References

U.S. Census Bureau. Trade in Goods with China. Last updated: 4 August 2022. Accessed 4 August 2022.

U.S.-China Trade Rebounds as China Eases Its Zero-COVID Policy Lockdowns

The volume of trade between the U.S. and China rebounded from April 2022's low. The change comes as the Chinese government began lifting some of its latest series of COVID lockdowns during the month.

That portends well for trade between the U.S. and China, because China's government continued lifting the burden of its zero-COVID policies in June 2022. For now, what it means is that the overall trajectory of trade between the two countries moved to converge with the projection of our post-pandemic trade recovery counterfactual. That slow convergence is shown in the following chart:

Combined Value of U.S. Exports to China and U.S. Imports from China, January 2017 - May 2022

Through May 2022, the gap between that trajectory and the post-pandemic trade recovery counterfactual shown by the dashed red line narrowed to $0.2 billion. We anticipate a continued improvement in June 2022.

References

U.S. Census Bureau. Trade in Goods with China. Last updated: 7 July 2022. Accessed 7 July 2022.

China’s COVID Lockdowns Slam U.S.-China Trade in April 2022

The Chinese government's execution of its zero-COVID policy has slammed trade between the U.S. and China. To recap, after surging in February, the growth rate of U.S. exports to China slowed to single digits in March 2022. One month later, they've fallen through the floor and shrunk year over year.

That much is evident in the newest update to our chart tracking the year-over-year growth rate of exchange rate-adjusted U.S.-China trade. The chart now covers the modern era for trade between the two nations from January 1986 through the just released data for April 2022.

Year Over Year Growth Rate of Exchange Rate Adjusted U.S.-China Trade in Goods and Services, January 1986 - April 2022

In this chart, we see the growth rate of U.S. exports to China has plunged into negative territory, recessionary territory in April 2022. By contrast, China's exports to the U.S. fell below the level of recent months, but still recorded double-digit year-over-year growth as progress is being made in reducing the backlog of Chinese goods waiting to be unloaded in U.S. ports. Given China's plunging exports in March and April 2022, that long-running backlog is now propping up the volume of Chinese goods coming into the U.S.

Looking at the combined value of goods exchanged between the two countries, we find little change in its trailing twelve month average, shown by the heavy black line in the following chart. The gap between that trajectory and the post-pandemic trade recovery counterfactual shown by the dashed red line held steady at $0.3 billion in April 2022.

Combined Value of U.S. Exports to China and U.S. Imports from China, January 2017 - April 2022

Looking forward, we know from the available atmospheric carbon dioxide concentration data that global economic activity picked up in May 2022, which is backed by preliminary Chinese trade data for the month. Looking further forward, the continued lifting of COVID lockdowns in China should boost growth into June 2022 as well, which we should see through increased U.S. exports to China and in upcoming months.

References

U.S. Census Bureau. Trade in Goods with China. Last updated: 7 June 2022. Accessed 7 June 2022.

The Largest U.S. Trade Deficit in U.S. History

In March 2022, the United States imported far more goods than it exported, breaking its previoius record for its monthly trade deficit by a wide margin. We thought the occasion of the new record provided an interesting data visualization opportunity, so let's start with the overall summary:

The Largest Monthly Trade Deficit in U.S. Histsory, March 2022

The U.S. exported $179.5 billion worth of goods in March 2022, while importing $297.0 billion. That makes for a monthly trade deficit of $117.5 billion, which is 14.2% larger than the previous record of $102.9 billion set in November 2021.

Because we regularly follow trade between the U.S. and China, we broke out the portions of each of these categories that are attributable to that portion of the U.S.' overall trade with respect to the rest of the world. We find that U.S. exports to China accounted for 7.5% of that total. U.S. imports from China accounted for nearly 16.0% of all it imported from around the world. Netting these numbers out, we find that the U.S.' trade with China accounted for 28.9% of its entire recorded trade deficit in goods for the month.

We decided to dig deeper into the U.S. Census Bureau's trade data to see what it was that added the most to the U.S.' record high trade deficit in March 2022. Those results are presented in the following interactive chart, for which you may need to click through to our site to get the big picture. Hover your cursor over the dots in the chart to get the related surplus (+) or deficit (-) in millions of U.S. dollars.

The biggest portion of the U.S.' record March 2022 trade deficit was in the category for electric machinery. The second largest portion was for heavy mechanical machinery. (Note: nuclear reactors are included in the title for the official category, but this particular class of goods was a very small contributor to the U.S.' trade deficit in March 2022!) The third largest category covers vehicles, which is mostly accounted for by imports of foreign-made automobiles and trucks. The large number of imports recorded during the month may be attributable to progress finally being made in unloading the backlog of large container ships that queued up in large numbers outside U.S. seaports during 2021.

References

U.S. Census Bureau. Trade in Goods with World, Not Seasonally Adjusted. Last updated: 4 May 2022. Accessed 4 May 2022.