As expected, China's exports to the United States surged in July 2024 as that country's exporters acted to beat the clock on the Biden-Harris administration's new and expanded tariffs. Their deadline to ship as many goods as they could before many of these tariffs took effect on 1 August 2024 and it appears they succeeded.
The surge was set into motion on 14 May 2024. The Biden-Harris administration imposed high tariffs on a range of goods, including "electric vehicles, batteries, semiconductors, steel, aluminum, critical minerals, solar cells, ship-to-shore cranes, and medical products".
In July 2024, the surge in Chinese container ships delivering cargo vaulted the Port of Los Angeles to the top of the list of the busiest ports in the United States.
The following chart shows how the July 2024 surge impacted the total value of goods traded between the U.S. and China.
Year over year, the value of goods traded between the U.S. and China rose from $48.6 billion to $51.5 billion, an increase of 10%. The increase in goods being exported from China to the United States accounts for 98.9% of the $4.8 billion increase.
Meanwhile, the threat of strikes among workers at U.S. east and gulf coast ports also prompted U.S. importers to try to pull in imports from other countries, especially holiday inventory that would ordinarily ship in September and October. For U.S. importers, pulling these goods in early helps ensure they'll be able to stock store shelves as the Christmas shopping season ramps up later this fall.
The decision to ship goods being imported through the U.S. east and gulf ports earlier can be seen in the next chart, which shows the total value of all goods traded between the U.S. and the rest of the world, both with and without the contribution of U.S. trade with China.
This second chart shows an increase of nearly $10 billion in traded goods between the U.S. and the rest of the world from January 2024's bottom to July 2024's estimate of $386.6 billion.
A report on China's trade data for August 2024 suggest the country's "manufacturers are rushing out orders ahead of tariffs expected from a growing number of trade partners, while imports disappointed amid weak domestic demand". The boost in global trade driven by China's tariff avoidance strategy is not limited to the U.S.
There's bad news ahead for trade. Because these factors are playing out as the result of trying to get as many foreign goods imported into the U.S. economy ahead of the disruptive events of punitive tariffs being imposed and a potential strike at U.S. east and gulf coast ports, there will likely be a severe drop-off in the volume of goods shipped to the U.S. in the months ahead. The 2024 summer surge in trade is not fueled by demand from a healthy U.S. economy and will not be sustained.
References
U.S. Census Bureau. Trade in Goods with China. Last updated: 4 September 2024.
U.S. Census Bureau. Trade in Goods with World, Not Seasonally Adjusted. Last updated: 4 September 2024.
Image Credit: Photo by Barrett Ward on Unsplash.
Labels: trade
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