China’s Imbalanced Trade with the United States, in Four Charts

By Matt Stiles | | Topics: Economy & Finance, Policy & Politics

A trade war could be looming between the United States and China, fueled by President Trump’s fixation on the two nations’ unbalanced import-export relationship.

The trade imbalance between the two countries — which might not hurt the United States that much — stems from the fact that China sells more to us than it buys, essentially.

That’s largely driven by macroeconomic factors, not some malicious intent: China is a low-cost manufacturing powerhouse, and the United States is an economy dominated by domestic consumption.

These charts help explain the $570 billion overall trade relationship between world’s largest economies.

First, here’s how the trade has changed over time. The United States imported $460 billion in goods from China last year. That figure has steadily increased in recent decades as China emerged as Asia’s top manufacturer. Exports from the United States to China, which doesn’t yet have the same per-capita domestic consumption as America, haven’t kept pace (again, not that we should be worried).

Here’s the same data, told with a column chart. It shows trade between the two countries in proportion. About 20% of our trade with China last year, and over recent years, has been from exports. Imports represent about 80% of our goods exchanges, on the other hand.

The resulting balance of trade, or trade deficit in this case, has also grown steadily over the years. These charts show the change, year by year, since 1998. Red bars represent the growing trade deficit in billions of dollars by month.

This measure — the trade balance — varies widely by country. One way to examine the relationship with other countries is to look at the balance in the context of the respective total trade. How much does the balance represent as a percentage of overall transactions, for example?

These charts show that figure for America’s top-40 trading partners in 2008. Blue bars reflect a positive trade balance for the United States. Red bars mean it suffered a trade deficit with a particular country in a given year.

When examined this way, you can see that China isn’t the only country in the world to sell more to Americans than it buys. China’s deficit might be huge — its population and output is quite large — but the trade deficit looks similar to other countries figures when viewed proportionally.

Promo background image courtesy Keith Roper.

The Curious Case of South Korea’s Vanishing Washing Machine Exports

By Matt Stiles | | Topics: Economy & Finance, South Korea

The Trump administration last week announced that it planned to impose higher fees, known as tariffs, to countries that export washing machines and solar panels the United States.

The tariffs, prompted by complaints from American companies who feel disadvantaged by global trade, were applied across the world — even though they seem primarily aimed at two nations who dominate the market: China and South Korea.

That’s in part because both countries have moved their manufacturing around to avoid such duties. In South Korea’s case, the change in strategy by companies like LG and Samsung seems remarkably obvious in trade data — on washing machines, in particular.

A bit of background: The U.S. Census Bureau keeps detailed data on specific product exports, by country, to the United States. The data reflect the total export value by year and national origin — where the ships came from, essentially — not by companies’ home countries. So Samsung products made in China and exported from China look like Chinese exports.

This graphic shows one possible scenario for how the strategy played out. Washing machine exports from South Korea to the United States dropped dramatically, for example, after a complaint filed in late 2011 by Whirlpool, an American manufacturer. A year later, exports from China increased significantly (and have since fallen, perhaps reflecting other shifts in manufacturing locations, such as Southeast Asia, Mexico and/or the United States itself).

The Times’ story noted the South Korean companies’ concerns:

Samsung and LG described Whirlpool’s case as a protectionist grab designed to shut out products that American consumers find more attractive, and argued that such restrictions on their products would hurt consumers by raising prices.

The export change appears to be because South Korean washing machine companies moved their operations to China during 2013 — and later the the United States — perhaps in an effort to avoid the complaints or looming tariffs. Or because the change was good business for the companies.

Anyway, the data seems pretty obvious:

America Imports Lots of Stuff from China, Including Christmas Decorations

By Matt Stiles | | Topics: Economy & Finance

Last year, the United States imported more than $460 billion in goods — clothes, toys, gadgets, you name it — from China. Of course, our Christmas decorations were on that list, too.

Some $2.2 billion in fake trees, miniature lights and assorted ornaments came from the Middle Kingdom last year, according to the U.S. Census Bureau’s detailed trade database.

The Christmas trade in ornaments is big business. It skyrocketed in the mid-1990s (like all products from China) and dipped during the recession (like all products from China).

Here’s a simple chart:

Merry Christmas. 圣诞节快乐.