The United States and China have been engaged in a trade war that seems, so far, to be without an end. Experts have long predicted that both countries will suffer from the said war. However, the recent numbers out of China seem to suggest that the latter is so far more affected than its North American counterpart.
China’s exports and imports suffered a sharp drop in June, against a backdrop of a hardening trade war with Washington, whose effects are now severely felt, according to figures released Friday by Chinese Customs.
China’s overseas sales fell 1.3% last month year on year, following a rebound of 1.1% in May.
Among the products whose exports suffered the biggest drop from June 2018 to June 2019, we find crude oil (-70.8%), ships (-23.1%), coke (-22.4%) ), wireless telephones, telephone handsets and telephony spare parts (- 16.9%) and steel products (- 8%). Exports of rare earths, textile accessories, agricultural products, sea and high-tech products, engines and spare parts for the automobile (products particularly targeted by US surcharges) are also down.
Imports continued their collapse (-7.3% year on year) after a fall the previous month (-8.5%), announced the General Administration of Customs. This is a much more pronounced drop than expected by experts surveyed by Bloomberg (-4.6%).
The main products that have suffered a sharp drop in imports are cereals and flour, copper and copper products, steel products, machinery, car parts, wood, rubber and also waste (- 17%). In early 2018, China has closed its doors to the import of waste (plastics and others) from the Western world, so we should not see here a consequence of the trade war.
These statistics are released as the world’s two largest economies attempt to find a way out of their trade war, triggered last year by the Trump administration. On Tuesday, key US and Chinese negotiators discussed a resumption of high-level talks, which were abruptly halted in May.
“The slowdown in global growth and the latest rise in US tariffs in mid-May put additional pressure on exports,” said Sheana Yue, an analyst at Capital Economics.
Beijing and Washington have been imposing on each other punitive tariffs since last year, which now apply to more than 360 billion annual trade transactions and hit companies on both sides of the Pacific hard.
In a context of tighter trade tensions with Beijing, Washington decided in May to raise these tariffs from 10 to 25% on Chinese products representing $200 billion in annual imports.
China responded by imposing new customs surcharges on more than 5,000 US products on June 1st.
But while talks between the two largest economies have just resumed, President Trump Thursday accused China of not buying US agricultural products as Beijing had committed to.
For several months, America, the leading economic power of the globe, has embarked on an open trade war against its biggest challenger with tariffs. “The Chinese are building their country with our money,” says Donald Trump.