Both countries face a deteriorating relationship over issues such as the origins of the COVID pandemic and hacking accusations.
China and the United States are exchanging goods at the fastest pace in years, giving the impression that the long tariff war and the pandemic never happened.
Eighteen months after the Trump administration signed the trade deal, it has turned out to be a truce, at best. The U.S. trade deficit has not shrunk, most of the tariffs remain in place, and the deal has not led to negotiations on other economic issues.
And yet, bilateral trade in goods is one stable area in a relationship that continues to deteriorate on other fronts, with growing tension over Hong Kong, Taiwan, human rights, the origins of the COVID-19 pandemic, hacking accusations, and many other sensitive points.
Monthly bilateral trade, which fell to 19 billion dollars in February of last year amid Chinese factory shutdowns, rebounded over the past year to new records, according to official Chinese data. And that boom is set to continue, given that China has purchased millions of tons of U.S. agricultural products for this year and next. In addition, American consumers keep buying and importing in record amounts.
While U.S. government figures differ somewhat, the strong trade flow defied all expectations that tariffs on hundreds of billions of dollars’ worth of goods would lead to a decoupling of supply chains. Instead, both sides learned to live with the taxes, with Chinese companies buying more to comply with the terms of the 2020 trade deal. In the United States, companies are buying goods they cannot obtain elsewhere to meet household demand, driven in part by trillions of dollars in government stimulus.
“We have seen strong consumer demand during the pandemic, and import levels soared,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, which represents suppliers ranging from small shops to retail giants. “That is a strong signal that the economy continues to recover.”
Exports from South Korea and Taiwan to the United States also increased over the same period, underscoring the strength of U.S. demand even as the country faced one of the worst COVID-19 outbreaks.
Nearly half of the 259 billion dollars in cargo moving in and out of the Port of Los Angeles, the largest in the United States, involves China and Hong Kong. U.S. demand for goods continues, with record imports arriving at the port in May as companies begin restocking ahead of the holiday shopping season.
“All signs point to a solid second half of the year,” said Port of Los Angeles Executive Director Gene Seroka during a recent press conference, noting that fall fashion, back-to-school, Halloween, and holiday items are already arriving at the docks.
With tariffs in place on more than 300 billion dollars in imports from China, from footwear and apparel to electronics, bicycles, and even pet food, many U.S. retailers are choosing to absorb the cost and reduce their profit, said Gold of the NRF. But some are passing the costs on to consumers.
Source: El Financiero
