The percentage of U.S. imports coming from China has dropped to levels not seen since 2008.
President Biden should declare victory and enlist China in bigger, more difficult issues— though don’t expect him to ask the man who started the trade war he has continued, former President Donald Trump, to the White House for a joint ceremony.
- Russia. Create whatever space is possible between Russia and China, even if it’s paper-thin. On slowing its energy purchases. By condemning, even mildly, the invasion of Ukraine. With a far less “warm and fuzzy” comment about China’s relationship with Russia. Both President Vladimir Putin and President Xi Jinping are autocrats with non-Western and non-democratic values. But the former, it is clear, poses the far greater threat. Like it or not, the U.S. and Chinese economies are intricately interwoven. (You should like it.) We don’t have anything close to that type of economic relationship with Russia, nor will we.
- Taiwan. Would the United States defend Taiwan from Chinese attack like we are defending Ukraine? Would our European partners on Ukraine join in? Would China really take the chance? The people who could effectively speculate on this are several pay grades above me. But, anything that puts the U.S.-China relationship in a better place also puts the U.S.-China-Taiwan situation in a better place. For a small island, Taiwan plays an outsized role in the global economy, particularly in semiconductor manufacturing and other high-tech areas. For a point of reference, the United States is doing five times the trade with Taiwan as with Russia this year.
- International-waters disputes. This is one of three areas Biden mentioned during a November 2021 virtual call with Xi. China has become more aggressive in recent years in Pacific waters.
- Climate change. Biden also mentioned the importance of collaboration here, as did Xi.
- Human rights. Finally, Biden mentioned this area as well, without naming specific areas at issue, which would include Tibet, the Uighurs and could include Hong Kong.
- Covid. Xi mentioned Covid, though Biden did not. Many in the international community remain upset and disappointed that China was not more forthcoming and transparent about the origins of the pandemic.
There are more, of course, and each of those as well as the above has its levels of complexity. But let’s look at the data.
First, a little background. China has been the United States’ No. 1 trade partner five of the last seven years, largely based on its imports into the United States. It was not No. 1 in 2020, when Mexico was, a first for our southern neighbor, nor in 2022, when Canada returned to the top spot it once held for decades.
So far this year, China ranks third, behind both Canada and Mexico, respectively. That was the order in which the three nations, which account for more than 40% of U.S. trade, finished in 2021. It was the first time China had not finished first or second since 2005.
Today, China accounts for 15% of all U.S. imports. That is for the month of May, according to U.S. Census Bureau data released last week, and assuredly a narrow window. On a year-to-date basis, that percentage is 17%. Last year, it was 18%.
But, as recently as 2017, China accounted for 21.58% of all U.S. imports from the world.
On these grounds, Biden can declare victory and eliminate most if not all of the tariffs in place, which cover, in varying degrees, some $350 billion in goods.
It can be argued they had little to no impact. That the inflation we see today did not come quickly. That it is the result of a massive infusion of government cash into the U.S. economy for businesses and people alike that came later, in response to the pandemic, at a time when they were unable to spend on services. That created enormous demand for manufactured goods, followed by the Russian invasion of Ukraine.
This doesn’t mean that U.S. imports from China are not growing — they are. This doesn’t mean the U.S. deficit with China isn’t growing — it is.
It does mean that U.S. imports from other nations are growing more rapidly.
What President Biden, former President Trump and many before these two men wanted was for more manufacturing to either come back to the United States — largely for political reasons — or closer to the United States, now called near-shoring.
Let’s see what the data suggests. Let’s look at the annual period from 2016, before the trade war, to 2021:
- Overall U.S. imports have risen 29.48%.
- Canada, 28.59%.
- Mexico, 30.83%.
- China, 9.46%
- South Korea, 35.88%.
- Taiwan, 96.54%.
- Vietnam, 142.07%.
- Thailand, 60.69%.
Are there games being played with “rules of origin” labeling, shifting goods previously stamped Made in China as Made in Vietnam or Made in Taiwan? Perhaps.
But fighting a new Cold War on two fronts — China and Russia — is much more difficult than fighting it only on one. It would be much easier to focus on Russia, whether China is by our side or simply on the sidelines.
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