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A Long-Term View On U.S. Trade With China

Trump has repeatedly stated that the U.S. is being ripped off on Chinese trade. In fact, the $419 billion in 2018 massive trade deficit is a sign of strength, as a strong U.S. economy boost demand for Chinese goods in the U.S.

Just hours after President Trump warned China not to retaliate against the U.S.’s latest tariff hike on Twitter, the Chinese Ministry of Finance did just that by raising the tariffs on thousands of American products worth roughly $60 billion in annual imports. Going into effect on June 1, the Chinese tariff hike is a direct response to the Trump administration’s decision to raise the tariff rate on $200 billion worth of imports from China from 10 to 25 percent on Friday, just hours after trade talks between the two countries had broken down.

“China’s tariff move is in response to the U.S. unilateralism and trade protectionism,” the Chinese said in statement issued on Monday. “China hopes that the U.S. will return to the right track of bilateral trade talks, work together with China and meet each other halfway, to reach a win-win and mutually beneficial agreement on the basis of mutual respect.”

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The U.S. is expected to respond to the Chinese announcement by levying an additional 25 percent on all remaining imports from China later on Monday, marking another escalation in the trade war that has been dragging on for more than a year now. Trump has repeatedly voiced his discontent with the trade imbalance between the world’s two largest economies, stating that the U.S. is being ripped off and losing hundreds of billions of dollars on Chinese trade every year. And while the U.S. trade deficit with China did in fact reach a record high of $419 billion in 2018, that money is neither lost nor is the large trade deficit necessarily a bad thing for the United States. In fact, the latest increase in the deficit is a sign of strength, as a strong U.S. economy and a strong dollar boost demand for Chinese goods in the U.S.

Infographic: A Long-Term View On U.S. Trade With China | Statista You will find more infographics at Statista

 

This graph shows the balance of trade of goods and services of the U.S. from 2010 to 2018, by quarter. The balance of trade of goods and services in the fourth quarter of 2018 amounted to a deficit of 166.96 billion U.S. dollars.

 

U.S. Trade Deficit in Goods Reaches Record High

Despite all efforts by the Trump administration to reign in the country’s trade deficit, the gap between imports to and exports from the United States climbed to a 10-year high in 2018. According to figures released by the U.S. Census Bureau on Wednesday, the U.S. trade deficit in goods and services shot up to $621 billion last year, the highest it’s been since 2008. The increase was mainly caused by a historically high deficit in goods trade, which amounted to a record $891 billion, of which $419 billion can be traced back to trade with China alone. 
While Trump has often stated his disapproval of America’s large trade deficit, arguing that the U.S. is on the losing side of world trade, there are several factors playing into the growing deficit, not all of which are bad. First and foremost, the U.S. economy is doing very well at the moment, resulting in strong demand for goods, many of which are manufactured abroad. At the same time, economic growth in China has slowed significantly last year, which reduced demand for American goods in the world’s second largest economy. The strong dollar also contributes to the deficit as it makes U.S. goods relatively more expensive to foreign buyers while making imports to the U.S. relatively cheaper.

Infographic: U.S. Trade Deficit in Goods Reaches Record High | Statista You will find more infographics at Statista

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