On 22 March 2018, President Trump initiated a trade war by imposing tariffs on goods the U.S. imports from China. Almost immediately, China retaliated by imposing its own list of tariffs on goods that it imports from the United States.
In the months since, there have been additional rounds of tit-for-tariffs imposed by both nations on each other’s goods. As for their impact, we can see little effect on the U.S., which has seen an increase it the year over year growth rate in the value of its imports from China, while the exchange-rate adjusted growth rate of the value of U.S. exports to China have clearly fallen.
In the absence of tariffs, we would consider the negative growth rate of U.S. exports to China as evidence of a significant deterioration in the health of China’s economy. And there is certainly independent evidence to support that observation, but the evidence is not as clear as it could be because of the specific actions China has taken in retaliation against the U.S.
Those actions were largely directed against two of the U.S.’ principal exports to China: soybeans and crude oil. We decided to take a closer look at each to see what the impact of each action has been to the U.S.
Starting with soybeans, we’ve estimated the number of bushels that the U.S. has exported to China in each month from January 2012 to the present, and also what the U.S. has exported to the rest of the world, since the U.S. grows far more soybeans than it consumes domestically – the excess would have to go somewhere, or else risk becoming spoiled while in prolonged storage if they cannot be sold.
Soybeans are, by far and away, the United States’ largest single export product to China, which are primarily used as animal feed to support China’s hog production. In this chart, we can see that China has severely reduced the number of soybeans that it acquires from the U.S. since the trade war began earlier in 2018, while exports to the rest of the world has only made up about a third of the U.S.’ typical level of exports in recent years.
