China Tariff Bargains, Canadian Fuel Leads to U.S. Price Deflation — Panjiva
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China Tariff Bargains, Canadian Fuel Leads to U.S. Price Deflation

Canada 338 China 1758 Trade Balance 657 U.S. 3297

U.S. trade price inflation slowed once more in December, with import prices tipped into deflation in December for the first time since Oct. 2016 on a year over year basis, Panjiva analysis of official data shows. That was largely down to fuel prices though excluding food and fuel import prices still only increased 0.6%, the third month they were under 1% point. On the same basis export prices rose 1.2%.

FUEL NOT THE ONLY REASON FOR SLOWING IMPORT PRICES

Chart segments U.S. trade price inflation by direction and coverage. Calculations based on Bureau of Labor Statistics data.   Source: Panjiva

The slide in import prices in recent months has been due in part to lower prices on imports from China, a reaction to tariffs that were imported under the section 301 review of Chinese IP practices. Price inflation for imports from China fell 0.2% on a year earlier following a 0.3% decline the prior month suggesting exporters to the U.S. have cut prices to partly offset higher tariffs for customers. That’s consistent with corporate commentary on price cuts, as outlined in Panjiva research of Jan. 10.

CANADA THE MAIN REASON FOR LOWER IMPORT PRICES, CHINA ALSO IN DECLINE

Chart segments U.S. trade price inflation origin. Calculations based on Bureau of Labor Statistics data.   Source: Panjiva

In the absence of formal trade balance data from the U.S. government relating to the shutdown, a combination of trade price inflation and seaborne shipping data can provide a guide to the underlying performance of imports. Panjiva data for U.S. seaborne shipments showed a 9.0% surge in shipments in December compared to a year earlier, driven in part by shipments from China as well as South Korea and India. So, while import price deflation will act as a drag it’s likely that U.S. imports broadly – though not necessarily from China – likely rose once again in December.

SIGNIFICANT U.S. IMPORT GROWTH HAS LIKELY CONTINUED IN LATE 2019

Chart compares year over year change in total U.S. imports in dollar terms, seaborne imports by number of shipments and import prices. Calculations include Bureau of Labor Statistics and U.S. Census Bureau data.   Source: Panjiva

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