U.S. Exports To China Collapse In August 2018

According to international trade data published by the U.S. Census Bureau, U.S. exports to China collapsed in August 2018. The following chart reveals that the gap between the trailing twelve month average of the combined value of goods traded between the U.S. and China has fallen nearly $1.1 billion below its pre-trade war trend, or roughly by 1.9% of the dollar value of that trade.

Our next chart, showing the year over year growth rate of U.S. exports to China and China’s exports to the U.S. from January 1986 through August 2018, shows that August 2018’s decline from pre-trade war levels is primarily due to a plunge in U.S. exports to China, which dropped by 12.7% from September 2017’s levels.

The next chart shows all of the available data for the value of the U.S. exports to China from January 1985 through August 2018, where we see that August 2018’s exports has dropped to levels last seen in mid-2015, when China’s economy was experiencing recessionary conditions.

We’ll explore the internals of the data in greater detail next week, but we would initially attribute the plunge in U.S. exports to China’s targeting the U.S.’ principal exports to China, soybeans, and oil, by substituting alternative suppliers and products. Reuters described the impact to U.S. oil shipments to China earlier this week:

U.S. crude oil shipments to China have “totally stopped”, the President of China Merchants Energy Shipping Co (CMES) said on Wednesday, as the trade war between the world’s two biggest economies takes its toll on what was a fast growing businesses.

Washington and Beijing have slapped steep import tariffs on hundreds of goods in the past months. And although U.S. crude oil exports to China, which only started in 2016, have not yet been included, Chinese oil importers have shied away from new orders recently.

“We are one of the major carriers for crude oil from the U.S. to China. Before (the trade war) we had a nice business, but now it’s totally stopped,” Xie Chunlin, the president of CMES said on the sidelines of the Global Maritime Forum’s Annual Summit in Hong Kong.