Has there been any trade-related news involving the U.S. and China lately?
We joke, but that's only because the international trade data documenting the exchange of goods between the two countries lags a little over a month behind when it occurred. For example, the trade data by the U.S. Census Bureau for February 2025 was reported on Thursday, 3 April 2025. That data doesn't show the effects of President Trump's new and expand tariffs on goods exported from China to the U.S. on that date, nor does it show the effects of China's retaliatory tariffs that it announced on Friday, 4 April 2025.
What that data does show however is that some of the frontrunning that boosted trade between the two countries in the last six months of 2024 and into January 2025 has ended. Also called "frontloading" by some analysts, this practice involved rushing goods in both directions across the Pacific Ocean ahead of the Biden administration's expansion of tariffs and trade restrictions that took effect in January 2025. And of course, ahead of any actions that President Trump might take.
The following chart chart shows that boost from businesses trying to beat the clock on new and expanded tariffs and other trade restrictions has ended, as the year-over-year change from February 2024 to February 2024 is negative, following recent months when the volume of shipments was higher because of frontloading.
Looking forward, March 2025's trade data will be the last month's data that will not show the impact of the U.S. and China's respective actions on tariffs in April 2025. The data for March 2025 will be released early in May 2025.
After that data is available, we'll develop a linear regression based on data from March 2024 through March 2025 to project into the future as a counterfactual - a trend that respresents what the level of trade between the U.S. and China would look like in the absence of the global tariff war that broke out on 3 April 2025.
That's a little different from the counterfactuals that we've recently presented, which were based on how trade recovered between the two nations after the 2008-09 Great Recession. Here, because we're not dealing with a recovery in trade after it bottomed, we're going to instead take advantage of a different pattern that prevails in historic data. Namely, the level of trade between the U.S. and China follows a near-straight line trajectory outside of periods of transition, such as the onset of recessions and recoveries, and other events such as tariff wars and pandemics.
Given the magnitude of the announced U.S. and Chinese tariffs, we expect a dramatic departure when we first present the trade data for April 2025 after it becomes available in June 2025.
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 March 2025.
Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of two container ships going in opposite directions. One ship is from the U.S. and the other is from China". The ships aren't going in opposite directions, but the imagery is useful so we're going with it.
Labels: trade
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