U.S. merchandise trade with China hits another record high after 3 years in 2022 Trade statistics released by the U.S. Department of Commerce on Feb. 7 show combined imports and exports reached $690.5 billion, surpassing the previous maximum in 2018. Interdependence remained high as the U.S. saw an increase in imports of everyday goods such as toys and China saw an increase in imports of food-related areas such as soybeans.
U.S.-China trade declines in 2019-2020 due to the impact of punitive tariff exchanges between the U.S. and Chinese governments that unfolded in the summer of 2018 and 2019 and supply chain disruptions caused by the new crown epidemic crisis. 2022 saw the U.S. Biden administration implement a de facto export ban on cutting-edge semiconductors to China in October, tightening trade restrictions in the high-tech sector, but increased trade in consumer goods. There is also an aspect of global inflation pushing up trade volumes.
The structure of trade has changed from 2018, before the full impact of the U.S.-China trade war became apparent. U.S. imports from China amount to $536.7 billion in 2022, reaching essentially the same level as in 2018, when it reached a record high. Accounting for an increased share of imports are general-purpose products such as toys and plastic products.
The toys and games category reached 7.5% from January to November, an increase of more than 2 percentage points from 2018. strong U.S. personal consumption in the first half of 2022. “For U.S. importers, the advantage of low prices for Chinese products remains prominent even with punitive tariffs,” said Kensuke Abe of Japan’s Marubeni Washington Office.
Most of the punitive tariffs totaling $370 billion imposed by the former Trump regime on Chinese products such as toys and plastic products remain in place today. The Biden regime discussed adjusting the tariffs in response to inflation, but the atmosphere cooled as U.S.-China relations deteriorated due to, among other things, the visit of then-Speaker of the U.S. House of Representatives Nancy Pelosi to Taiwan in August 2022.
U.S. exports to China reached a record high of $153.8 billion in 2022. The biggest change was in grains, including soybeans and corn, which accounted for 11% of exports from January to November, up sharply compared to the same period in 2018 (3%). In terms of production of soybeans, which are consumed more in China, the United States and Central and South America account for 80%, and demand is expanding not only for consumption but also for feed use such as pig farming.
On the other hand, aircraft and space-related accounted for 3 percent of exports, down from 14 percent in 2018. U.S. aircraft such as those made by Boeing were once the top export to China, but orders are in the doldrums due to the trade war and the New Crown epidemic crisis. China is also pushing ahead with the development of domestic aircraft manufacturing.
While facing political tensions, companies are taking action to avoid missing out on business opportunities in the huge markets of both the U.S. and China. Craig Allen, president of the National Committee for U.S.-China Trade, said that “95 percent of the trade industries that have nothing to do with security and safety have maintained their relationships.”
There is also corporate activity that is not reflected in trade statistics. Chinese companies focus on Mexico as a production base in order to maintain exports to the United States. The Chinese home appliance company Hisense produces refrigerators for the United States through a new factory in Mexico.
Bergsten of the U.S. Petersen Institute for International Economics noted, “Even if the U.S. wanted to blockade China, it would fail. While exploring a functional decoupling strategy, the world economy should be pulled by the U.S. and China”.
It is unknown whether U.S.-China trade will continue to grow in the future. The Boston Consulting Group (BCG) predicted in a January report that U.S.-China trade will decrease by 10 percent by 2031.