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Despite POTUS Trump’s game-changing tariffs, China continues to amass record trade deficits

(National SentinelStalemate: While POTUS Donald Trump is generally perceived to be winning various ‘trade wars’ with China, Mexico, and Canada, there hasn’t been much actual progress in terms of ‘leveling the trading field.’

China, for instance, continues to rack up record trade deficits with the United States, and in August expanded to $31.06 billion, The Wall Street Journal reports:

China’s trade surplus with the U.S. widened to $31.05 billion last month from $28.09 billion in July, while its total trade surplus narrowed, data from the General Administration of Customs showed Saturday.

The data came as Washington prepared to roll out a third round of tariffs, moving it closer toward imposing levies on virtually all Chinese goods entering the U.S.

A combination of factors, including a weaker Chinese yuan and exporters’ frontloading of shipments in anticipation of more tariffs, contributed to the worsening trade imbalance, said Liu Xuezhi, an economist with Bank of Communications.

“In the short term, it is difficult for the trade gap to narrow because American buyers cannot easily find alternatives to Chinese products,” said Liu. He said that means that the trade dispute isn’t likely to be resolved anytime soon.

In April and May, the Chinese currency — the yuan — fell 9 percent against the U.S. dollar but has held steady since. And as long as China’s trade surplus remains high and even expands, Beijing, sitting atop the world’s second-largest economy, likely won’t be in any hurry to change its trade policies.




A weaker yuan also makes Chinese-made products cheaper to American consumers, the WSJ noted.

In any event, Chinese economists are engaged in a propaganda war to downplay the significance of Trump-imposed tariffs, which currently affect $50 billion worth of goods but could soon be expanded to about $506 billion worth — the sum of all Chinese exports to the U.S.

Former People’s Bank of China (PBOC) governor Zhou Xiaochuan told CNBC Friday the tariffs would not significantly affect his country’s overall economy.

“We used a mathematical model to calculate the negative impact of the trade war. It is not very large, it is not significant. It is less than half a percent (of an) impact to the Chinese economy,” he said.

Should POTUS Trump impose tariffs on all Chinese goods, Zhou says he’s advised President Xi Jinping to simply reroute Chinese exports to other countries.



“The worst case scenario is that China is no longer going to export $500 billion of goods to the U.S. market and then its dependent how quickly you can diversify those export goods to the other countries. Actually I think China could act quickly,” Zhou said.

But could it? The U.S. market is the largest in the world; 70 percent of our own economy is made up of consumer spending. While similar products imported from nations other than China may cost U.S. consumers more, where else will China unload $500 billion worth of goods? What other economy — or economies — can absorb that amount of consumer and manufactured goods?

China’s economy has slowed somewhat this year to around 6 percent per annum, but the Trump administration’s anti-tax, anti-regulation approach has the U.S. economy soaring at 4.2 percent in the second quarter. That, too, leads to a trade stalemate.

“My sense is that, until there’s some hiccup in the U.S. economy, the Trump administration believes its strategy is working and they’re going to stick with it,” said Simon Lester, associate director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, CNBC reported.


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2 Comments on Despite POTUS Trump’s game-changing tariffs, China continues to amass record trade deficits

  1. There is an upturn, Americans are spending more, hence a larger trade deficit.

  2. The Chinese are bluffing and acting proud. Tariff all $500b worth and let’s get down to business. Donald needs to make their lives a helluva lot more difficult, and right NOW.
    Let them reroute, who cares.
    Christ, I saw a bunch of American flags today in a store and just for the helluvit I turned them over to see “Made in China,” and I’m like WTH. Isn’t it time we made our own damn flags in the US ?

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