EsThe surge in the U.S. trade deficit continued unabated in October with an 18.1% rise on a year earlier resulting in a $55.5 billion goods-and-services deficit. That was the highest since Oct. 2008, Panjiva analysis of official data shows, and was largely the result of a 14.1% rise in the goods deficit as outlined in Panjiva research of Nov. 28.
Source: Panjiva
The data will likely worsen relations with both the EU and China. In the case of the EU, where trade deal negotiations are scheduled to start in the new year, there was a 28.4% rise in the deficit to reach a record high. With regards to China there was a 22.3% surge vs. a year earlier to reach a record $43.1 billion, or 48.2% of the entire trade-in-goods deficit.
Source: Panjiva
The data shows in a very tangible way that the U.S. is “losing” the trade war with China on the basis of the Trump administration’s key trade metric. In aggregate U.S. exports to China fell 29.6% on a year earlier to the lowest for a single month since July 2016 and was the worst month of October since 2009. The drivers of that decline were however similar to a month earlier with exports of soybeans, energy and cars – which were subject to 25% duties since July – fell close to zero.
Meanwhile U.S. imports from China climbed 8.8% on a year earlier. The latter likely reflects an acceleration of imports ahead of the risk of an increase to 25% from 10% of duties on around $200 billion of imports from China. That can be seen in a 15.5% rise in imports of those products in October vs. a year earlier after a 20.7% surge in September.
The recent agreement between President Donald Trump and President Xi Jinping to suspend that increase may lead to a slowdown in shipments in December, though Panjiva’s preliminary seaborne import data in November shows a modest increase vs. a year earlier still.
Source: Panjiva
Looking specifically at products afflicted by tariffs on both sides shows China’s focus on commodities – where pricing is more important – has proven more effective in cutting imports compared to the U.S. focus on industrial supply chain components where switching supplies is more complex.
Panjiva analysis shows Chinese imports of list one and two products where 25% tariffs have been applied since August have now fallen by 68.0% in the three months to Oct. 31 vs. a year earlier while list three products (10% from September) increased modestly by 2.3%.
By contrast U.S. imports of list one and two have fallen by 13.2% but list three has risen by 13.5%. In dollar terms that means China imports of U.S. products have fallen by $8.26 billion in the past three months on a year earlier while U.S. imports from China have increased by $5.09 billion making for a net $13.35 billion swing.
Source: Panjiva
