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.