The upshot is that US tariffs appear somewhat limited in their ability to control what American firms import. — AFP
BEIJING: Six months into Donald Trump’s trade war, the resilience of Chinese exports is proving just how essential many of its products remain even after US levies of 55%.
Every day, about a billion dollars worth of goods is crossing the Pacific from China to the United States, with the amount ticking up in September from August.
Despite double-digit drops in the value of overall trade during the past half a year, some products have recently seen an increase from 2024, defying trade strains between Beijing and Washington.
The upshot is that US tariffs appear somewhat limited in their ability to control what American firms import, as China’s sway over sectors such as rare earths and electronics makes its products hard to dislodge, at least in the short term.
That may change over time, especially if Trump further hikes tariffs, as the Republican leader has repeatedly threatened to do.
“China’s strong position in global supply chains gives it some bargaining power with US importers in the near term,” wrote Bloomberg economists Chang Shu and David Qu, who cautioned other countries can’t quickly displace China as a supplier to the United States.
“Realigning production will take time,” they added.
All that’s giving President Xi Jinping more bargaining power as his trade negotiators head into talks aimed at extending a 90-day tariff truce that’s set to expire in November.
In the third quarter, more than US$100bil worth of Chinese goods arrived in the United States, helping Beijing keep economic growth on track for its annual target and pushing the bilateral trade surplus up to US$67bil.
The pairing between the world’s two biggest economies goes beyond products whose global supply is dominated by China, such as rare earths or chemicals in widely used medicines.
While almost all the top 10 exports to the United States slumped last quarter from a year earlier, shipments of e-cigarettes rose, according to a Bloomberg analysis of China’s customs data.
E-bikes are also seeing strong US demand, with Chinese firms exporting more than US$500mil worth in the third quarter, slightly up on a year earlier.
Exports of refined copper cathodes have soared in value from almost nothing to US$270mil in the past three months, with electrical cables rising 87% to US$405mil.
“Both sides may reduce dependence on each other but it cannot be reduced to zero,” said Zhaopeng Xing, senior China strategist at Australia & New Zealand Banking Group.
Cracks in Trump’s tariff wall are probably making some of the trade possible by keeping costs down.
ANZ’s Xing said American importers are able to pay a lower levy by declaring the customs value of goods based on their first sale in a third country, and then raising the price when the items reaches a US port.
Transhipping via Mexico or Vietnam mean some firms are likely not paying the full tax. “There are a lot of loopholes,” Xing added. US Customs “just don’t have enough manpower to address them.”
In the July-September quarter, companies in China shipped almost US$8bil dollars worth of smart phones, laptops, tablets and computer parts to the United States.
While that was less than half the amount sold in the same period last year, it still represented a substantial haul considering the high tariffs.
Already, shipments from China this year have dropped to less than US$320bil, about the same level as in 2017 before the first trade war under Trump. — Bloomberg
Strong demand: Shipping containers from Hede Shipping, from Chinese state-owned Hebei Port Group, seen at Port of Los Angeles in California. Some products have recently seen an increase from 2024, defying trade strains between Beijing and Washington. — AFP
