Trade War Shift Followed By Covid
Recessions tend to reduce trade deficits. Notice the impact of the Great Recession and again now.
2019 is the key year. Notice that Trump reduced the trade deficit with China from $418.95 billion to $345.2 billion. That’s an improvement of $73.75 billion.
However, the trade deficit from top partners rose from $848.52 billion to $864.24 billion. That’s an overall worsening of $15.72 billion.
US Balance of Trade China Mexico Vietnam
2018 to 2019 Synopsis
- The trade deficit in goods with China improved from $418.95 billion to $345.2 billion. That’s an improvement of $73.75 billion.
- The trade deficit with Mexico, Taiwan, and Vietnam rose by $47.07 billion.
- The overall trade deficit (17 nation total including China) rose by $15.72 billion.
Chart data is from usatrade.census.gov.
The data shows that all Trump managed to do is shift the trade deficit from China to other nations led by Mexico, Taiwan, and Vietnam.
The Covid recession further reduced the trade deficit pretty much across the board as recessions tend to do.
China Trade Surplus Hits Record High in November
Note that China Has a Record Trade Surplus in November as exports surged.
Data from the Census Department is through October and does not reflect China’s record November surplus.
Trump’s Failure
Trump tried to balance the trade deficit with tariffs. It was a fool’s mission as explained in Balance of Trade vs Gold Window
Also consider Trump’s Unwinnable Trade War: Gold Explains Why
Mish
A
As an alternative to trans-shipment, there is always something like this:
Made in USA!
Chicago is building!
Everyone usually says Trump failed with China and the tariffs only hurt U.S. citizens. I have to say at least he tried? From what I can tell he is the only president that really gave it a try and tried to stop China’s unfair trade tatics. I did read some U.S. companies diversified their supply chain to other countries….so China had to take a little hit. I cannot remember the person name was but when Trump started the trade war, he commented that China has been in a trade war with the U.S. for 20 years and we do not know it.
I guess the other option is to just give up and say we cannot beat China. Every president has lost the import/export game with China since they opened their border. They still steal designs, IP, software, etc. I have some friend who design logos for hats, t-shirts, pillows, and sell on Ebay, Amazon, and Etsy. Their designs get copied within a week and sold at lower prices with a shipping address in China. They are pretty much ready too give up.
70% of our GDP is services so I guess we do not need manufacturing? We can all be either Starbuck Baristas, Uber Drivers, etc.
I told a twenty something family member the best job to get long term is a government job….at least you will get paid more than the average public job and get a pension.
It’s Time to End China’s Most Favored Nation Status
December 2, 2020
Senator Cotton’s press release states: “The China Trade Relations Act would revoke China’s permanent most-favored-nation status and return to the pre-2001 status quo, whereby China’s MFN status must be renewed each year by presidential decision. Congress could override the president’s extension of MFN by passing a joint resolution of disapproval.
Normalizing trade with China back in 2000 was a colossal mistake
Open markets have led to massive U.S. job losses
AMERICAN UNITED WORKER FRONT
America lost the war along time ago through cultural surrender of saving a buck and taking a nap.
Ask ourselves, why am i writing this on a product made in China ?
They study and work much harder than Americans for less pay. Fact.
Americans play much harder, in particular soft spoiled youth passing hours of the day computer gaming.
Is their chinese intellectual pirating and copying going on … sure. But that’s not why Foxconn makes Apple’s phones.
Chinese unfair trade practices ? Right , and the Fed Reserve reducin deregulated too big to fail casino banking loses since 2008 by printing trillions (exporting inflation) of the world’s base currency is …. sooo fair.
Two wrongs don’t make a right, but certainly don’t make the fat, finger pointing, xbox playing Amerikun the good guy.
Bill Kristol
@BillKristol
·
1h
“Trump administration officials passed when Pfizer offered in late summer to sell additional doses of its Covid-19 vaccine…Now Pfizer may not be able provide more of its vaccine to the U.S. until June because of its commitments to other countries…”
…Mexico, Taiwan, and Vietnam…
Hmmm, one inquiring mind wants to know how much transhipment and relabeling is a part of this deal.
Another inquiring mind wants to know how much of the ownership of these third country buinesses tracks right back to China.
There are many incentives to deal with the same people but end up with a different “made-in” label.
Shifting manufacturing operations to change a product’s country of origin is a longstanding and legitimate way to mitigate tariffs on goods imported into the U.S. While many U.S. companies are properly using this method to reduce their exposure to the 25 percent additional tariff the U.S. has imposed on hundreds of billions of dollars’ worth of goods from China, others are taking shortcuts by simply transshipping goods from China and labeling them as products of a third country. Importers should pay closer attention to their supply chains to avoid such illegal activity.
According to press reports, Vietnam has been a particular target of scrutiny by U.S. officials on the hunt for Chinese goods seeking to avoid the Section 301 tariffs. Trade data show that U.S. imports from Vietnam have surged as those from China have declined in the wake of the tariffs. Some of that increase is legitimate, an article in The Loadstar notes, as “there is a significant number of Chinese businesses setting up factories in Vietnam to legally produce and assemble goods” and foreign direct investment from China into Vietnam has hit “record levels.” This trend was already underway due to increasing labor and other costs in China but appears to have accelerated in light of the U.S. tariffs.
However, observers say at least some of the increase is also due to transshipment, or goods made in China being re-routed through Vietnam where they are labeled as products of that country and then sent on to the U.S. to avoid the tariffs on China. A Bloomberg article said Vietnamese officials recently found “dozens of fake product-origin certificates and illegal transfers by companies trying to sidestep U.S. tariffs on everything from agriculture to textiles and steel” from China. In response, officials have reportedly pledged to strengthen factory inspections, tighten the supply of certificates of origin, and increase penalties on trade-related fraud.
80% of China top exports products owned by Taiwan factories. So Taiwan factories will move the supply chain to Vietnam, Thailand, etc.
Taiwna exporters focus on consumers products using less steel.
China companies more focus on machineries , cars, steel products.
Anglo super elite have very very poor thinking abilities. They set up China as the world factory, and put all the eggs in one basket, all in the name of globalisation scam.
Instead if they got the brains, America could have a diverse source of supply chain from South East Asia, South Korea, Taiwan, India, Mexico, South America and Africa, etc.
These supply chain countries will own US treasury bonds in a well distributed balanced global finance.
By putting all eggs in one basket which is China, the greedy no brain Anglo super elite are just asking to be SHOT AND KILLED BY CHINA.
China is a creation of the globalist super elite bastards from London, that sold out America and exported US manufacturing to engorge some fat f(*)k billionaires from Wall Street.
Globalization scam has been sold by the last several Presidents, Congress, both Teams, and MSM.
It’s literally a scam to make a few people super wealthy. The West created today’s China by allowing corporates to outsource to China due to own greed, and not having the foresight to see the negative effects that would have.
Kissinger, Bush, Obama, Clinton, Biden etc.. have all made deals with China to sell US down the road to globalization.
The Anglo super elite Predator Class transported US factories to China to make billions on wage arbitrage. The money is in the Cayman Islands and the factories are in China.
The West is now face a powerful and highly nationalistic adversary that does not share a commitment to the rule of law and human rights.
China can be weakened by severely reducing that outsourcing but it seems clear that it will react militarily.
If the West will initiate a permanent move against the CCP within the next two years (removing the vast majority of its investments and manufacturing reliance) the CCP will collapse.
If we do not do that, the West will collapse within 5 years. It’s our choice.
AMERICAN UNITED WORKER FRONT
Mish, I think The Street messed something up. Going directly to your link takes me to a error page on multiple devices.
What do you see?
Exact link please
I was getting a weird error yesterday too. Apologies but I didn’t capture the URL. It was just when I tried to get to your home page on the Street. It was something weird like a 505 error (not a 404). Even when I went to the Street main page, searched on “Mish”, and tried to pull up a past post, I got the error. Today has been fine, though. I will try to get a screenshot next time.
“All Trump managed to do is shift the trade deficit from China to other nations led by Mexico, Taiwan, and Vietnam.”
How much has this cost Americans via tariffs and what are the benefits?
Don’t worry. The trade war and tariffs will go away. More items will be produced in China and value chain jobs will move over their too. What I mean is more engineering and design jobs. Once that happens, China will not be so concerned about trying to peg to the USD. We will see the dollar drop, Chinese product prices will increase, and and will create more lower paying jobs. The people who want to get rich will realize you will need to be a reseller of Chinese goods and services.
3 of the 5 largest companies by revenue in the world are now from China. The largest is Walmart and they are basically a Chinse reseller. So you could really say 4 of the top 5. 10 years ago China only had 1 in the top 10.
They are minting so many Billionaires in China it is crazy. In 2020, China minted 257 billionaires over the past year, bringing the total to 878, according to the Hurun Rich List 2020, which tracks wealth in China.
the tariffs didn’t cost the consumer much. Most companies, like Target and other retailers forced suppliers to eat the tariff. The main beneficiary is in tax revenue going to the government. You have to tax something. Do you want to tax income which makes us less globally competitive or imports that helps even the playing field?