China's exports to the U.S. increased year-over-year in June 2024. Looking forward to next month, China's exports to the U.S. are expected to come in higher than previously projected as well.
Unfortunately, the increase in Chinese goods arriving in the U.S. this summer is not because the U.S. economy is experiencing a summer growth spurt. Instead, it's mainly because many U.S. businesses importing goods from China were racing the clock to bring in as many goods as they can before the Biden-Harris administration's latest set of higher tariffs on Chinese goods went into effect on 1 August 2024.
That surge has come as U.S. retailers importing consumer goods from China for 2024's Christmas shopping season that aren't subject to the new tariffs have also pushed to get their shipments ahead of their usual schedule. That effort is linked to the timing of a potential strike by U.S. port workers later this year, which would disrupt their supply chains. Not to mention potentially resulting in empty store shelves if they didn't take action this early.
Because it takes several weeks for the container ships carrying Chinese goods to cross the Pacific Ocean before reaching the U.S.' west coast ports, most of these shipments had to be underway by the end of the first week of July to deliver their goods before the new tariffs went into effect on 1 August 2024. After that week, it would be logical to expect China's exports to the U.S. to slow significantly, since they would face higher costs from the new tariffs taking effect at the beginning of August. Early reports on China's July exports suggest that's exactly what happened:
China’s exports growth unexpectedly slowed in July, signaling a cooling of global demand that has been propping up growth in the world’s second-biggest economy.
In the context of trade growth between the U.S. and China in recent years, China's export surge in the last several months contributed to the apparent bottoming of what had previously been a negative, downward trend in trade between the two nations. But the actual bottom may still be to come, driven by the Biden-Harris administration's ongoing anti-free trade policies.
The following chart illustrates the negative impact of those policies.
As of June 2024, the gap between a post-pandemic counterfactual based on how trade between the two countries expanded following the 2008-09 recession has expanded to $17.2 billion. Since September 2022, the Biden-Harris administration's anti-free trade policies have collectively shrunk the total value of trade between the U.S. and China by nearly $224 billion.
With the administration's new tariffs now coming into effect, their impact will start to be seen when the trade data for August 2024 becomes available in another two months. The trade data for July 2024 that's coming next month, inflated by the rush to beat the Biden-Harris tariff clock, may the be last good news we'll see in this trade data for a while.
References
U.S. Census Bureau. Trade in Goods with China. Last updated: 6 August 2024.
U.S. Census Bureau. Trade in Goods with World, Not Seasonally Adjusted. Last updated: 6 August 2024.
Image Credit: Microsoft Copilot Designer.. Prompt: "An editorial cartoon of the captain of a container ship from China ordering his crew to go full speed ahead to try to avoid new tariffs".
Labels: trade
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