The $2.18 Billion Cost of China’s Retaliation Against Trump’s Tariffs — Panjiva
Más

Panjiva_research_logo

The $2.18 Billion Cost of China’s Retaliation Against Trump’s Tariffs

Ags - Grains/Beans 162 China 1758 Cons. Discr. - Autos 661 Cons. Staples - Food/Beverages 395 Energy - Conventional 272 Energy - Crude Oil 194 Tariffs 1169 U.S. 3297

The U.S.-China trade war reached something of a peak in September with the implementation of 10% duties on around $200 billion of Chinese exports by the U.S. and 5% to 10% duties on $60 billion of U.S. exports by China. As outlined in Panjiva research of Sept. 18 that came on top of 25% duties on around $50 billion applied in July and August.

So far it appears that the impact of China’s duties is more significant than America’s. The widening of the U.S. trade deficit – the Trump administration’s key trade metric where a larger number is perceived as a negative outcome – to a record $40.2 billion in September is one piece of evidence. The other is that a marked downturn in U.S. exports of the products covered by Chinese duties where list 1 and 2 relate to the July and August products and list 3 to September’s.

Panjiva analysis shows U.S. exports of list 1 products fell by 66.3% in September vs. a year earlier while those of list 2 products slumped 50.3%. The list 3 products fell by a more modest 0.7% though that came after two months of growth (5.8% and 7.9% in July and August) and duties only took effect from Sept. 24.

EXPORTS SLUMP AS TRADE WAR BITES

Chart segments change in U.S. exports to China by duty round coverage, where list 1 covers July tariff round, list 2 covers August, list 3 covers September and all others that have yet to face duties.   Source: Panjiva

The list 3 products may also see a further decline should an increase in rates to 25% from 10% in the new year, which is already baked into the Trump administration’s trade policy, take place. It is also worth noting that all other products not covered by duties actually surged 36.7% higher in September vs. a year earlier. That may be a sign of stockpiling ahead of the risk of the application of duties to all products should the Trump-Xi summit

May see further decline though 10% vs. 25% in NY. Also surge in remainder +36.7% possibly on concerns of further extension of duties. Both higher duties rates and extended product coverage are potential risks depending on the forthcoming summit meeting between President Donald Trump and President Xi Jinping, scheduled for Dec 1. according to Politico.

ACCELERATED BUYING AMONG PRODUCTS NOT YET AFFLICTED BY TARIFFS

Chart segments U.S. exports to China by duty round coverage, where list 1 covers July tariff round, list 2 covers August, list 3 covers September and all others that have yet to face duties.   Source: Panjiva

The total drag on U.S. exports from the products covered by the new duties in September vs. a year earlier was $2.18 billion. While the decline were wide-ranging only a handful of products represent the majority of the decline.

Panjiva data shows that those include soybeans (down $1.07 billion, down 97.8% on a year earlier), crude oil ($429.0 million with no exports on September) and propane ($194.0 million lower, off 91.6%). Outside of commodities – most of China’s list 1 and 2 duties are focused on energy, materials and food – the biggest loser was the automotive sector with a $216.0 million drop including a 31.7% drop in exports of passenger cars.

BEANS, ENERGY AND CARS SUFFER MOST OF THE DAMAGE FROM DUTIES

Chart segments U.S. exports to China covered by list 1, 2 or 3 duties in the month to Sept. 30 by product class (HS-2).   Source: Panjiva

PANJIVA RESEARCH is a service provided by Panjiva, Inc. ("Panjiva") to relevant global subscribers, and are deemed to be Panjiva "Services" subject to the Panjiva Terms & Conditions of Use. Information contained within or made available via the Services is for informational purposes only and nothing in the Services shall constitute or be construed as an offering of financial instruments, or as investment advice or recommendations by Panjiva, Inc. or its affiliates of an investment strategy or whether to "buy", "sell" or "hold" an investment. The Services may include views and commentary about customers of Panjiva. No aspect of the Services is based on consideration of your individual circumstances, and you should determine on your own whether you agree with the information contained within or made available via the Services. Employees involved in Panjiva Research may hold positions in securities analyzed or discussed in the Services. Panjiva does not make any express or implied warranties, representations, endorsements or conditions with respect to the Services and the information contained within or made available via the Services, including without limitation, warranties as to the usefulness, completeness, accuracy, currentness, reliability or sufficiency of any information (including, without limitation, conclusions, statements, opinions, estimates, forecasts or projections of any kind) and expressly disclaims any implied warranties. Neither this disclaimer nor any of its contents may be forwarded or redistributed without the prior written consent of Panjiva. © 2019 Panjiva, Inc. All Rights Reserved.