China Currently “Winning” The Trade War as U.S. Deficit Hits 10-Year High — Panjiva
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China Currently “Winning” The Trade War as U.S. Deficit Hits 10-Year High

China 1758 Trade Balance 657 U.S. 3297

The U.S. trade deficit surged 21.6% higher in September vs. a year earlier to reach $54.02 billion, Panjiva analysis of official data shows. That was the 19th month of expansion since January 2017 and wa largely down to a 17.2% jump in the goods deficit which, at $77.23 billion, was the highest since July 2008.

NO SIGN OF A DEFICIT TURNAROUND SO FAR

Chart compares U.S. goods deficit to goods-and-services deficit on a monthly (dotted) and annual average (solid) basis. Chart based on U.S. Census Bureau data.   Source: Panjiva

An 8.0% expansion in the services surplus marked a slowdown from 9.4% a month earlier and was largely due to weaker services exports growth. The insurance sector was the main problem area after a 1.4% decline, while financial services grew at the slowest rate since September 2016. Additionally the transport sector (airlines) grew by just 0.1%, the slowest expansion since the sector started to recover in 2016.

EXPORT SERVICES EXPANSION STEADILY SLOWING

Chart segments year over year change in U.S. services exports by industry. Calculations include U.S. Census Bureau data.   Source: Panjiva

Unsurprisingly the primary driver of the growth in the goods deficit was China with a 16.2% increase compared to a year earlier to reach more than $40 billion for the first time. That was largely down to the impact of a rush to beat duties applied by both sides from September 24, as first shown in seaborne shipments outlined in Panjiva research of Oct. 17. As a consequence China accounted for 55.2% of the overall U.S. trade deficit.

CHINA NOT THE ONLY “UNFAIR” COUNTERPARTY IN U.S. TRADE

Chart segments U.S. trade-in-goods deficit by counterparty on a monthly (dotted) and annual average (solid) basis. Calculations include U.S. Census Bureau data.   Source: Panjiva

At the headline level it appears that China’s retaliatory duties on U.S. exports have had a more negative effect than vice versa. U.S. exports to China fell 10.3% on a year earlier whereas U.S. imports from China surged 10.1% higher. The only other significant drop in exports was to France (5.2%) and OPEC countries (9.4%). In terms of North America the outlined USMCA deal has yet to have an effect on trade, with U.S. exports to Mexico and Canada up by 4.1% whereas imports climbed 10.9% higher.

CHINA SLASHING AMERICAN PURCHASES, STILL SELLING MORE TO THE U.S.

Chart segments year over year change in U.S, goods trade by country. Bubble size indicates total trade in the month. Data covers month to Sept. 30. Calculations include U.S. Census Bureau data.   Source: Panjiva

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