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Today's release of U.S. International Trade Data shows Canada and Mexico surpassed China but the biggest beneficiary is Vietnam.

The Wall Street Journal reports Tariff Fight Costs China Spot as Top U.S. Trading Partner.

U.S. imports from China fell 12% in the first six months of 2019 from a year earlier, while exports fell 19%, the Commerce Department said Friday in a monthly trade report. The total value of bilateral goods trade with China, $271.04 billion in the first half of the year, fell short of that with both Canada and Mexico for the first time since 2005. Mexico is now the U.S.’s top trading partner.

The decline in trade flows has hit U.S. farmers’ and multinationals’ earnings and sent importers scrambling to rearrange complex, global supply chains for electronics, machinery and commodities. It also highlights the widening impact of President Trump’s effort to negotiate better terms for U.S. companies in China and reduce America’s trade deficit.

Import Shuffle

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Vietnam is the biggest beneficiary of in percentage terms, followed by the Netherlands, Belgium and Taiwan.

Winning Not

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Despite the decrease in trade with China, Trump has not put a dent in the trade deficit.

Recession May "Help"

In a perverse way, Trump may manage to reduce the trade imbalance. His tariffs are certainly recessionary and note what happens to trade in recession in the above chart.

A Global Manufacturing Recession Started and Trump's China Tariffs Made Matters Worse.

And please note the average lead time between manufacturing recessions is less than a full quarter.

For discussion, please see Manufacturing Recessions vs Real Recessions: How Much Lead Time Do You Expect?

Mike "Mish" Shedlock