This week’s election of Donald Trump as the U.S.’s 47th president is almost certainly likely to lead to another trade war with China, and further tariffs on American imports. During the campaign, Trump said his favorite word was tariff and floated a universal 10% tariff and specific duties on Chinese imports as high as 60%.
If applied, the levies would jack up average tariffs to 17.7%, America’s highest rate since 1934, during the Great Depression, according to the Tax Foundation, representing a sharp turn toward deglobalization, and a potential deflation of China’s powerful export economy.
The affirmation of Trump’s election this week will accelerate a trend international manufacturers and purchasers worried about the risk of tariffs have already set in motion—increased exports, especially from China to the U.S. and Europe, before the tariffs hit sometime during the course of next year.
In October, China increased its overall outbound shipments a whopping 12.7% year-on-year to $309.1 billion, their briskest pace in more than two years. At the same time, imports declined 2.3% to $213.3 billion. The lackluster import figures point to potential weaknesses China’s domestic economy.
That makes taking advantage of current trade terms with the U.S., China’s number one export market, even more urgent. Exports to the U.S. increased 8.1% in October to $46.7 billion. Interestingly, imports from the U.S. grew 6.6% to $13.2 billion, making it one of the only regions to increase exports to China in October. Beijing is almost certain to retaliate next year with tariffs on U.S. imports, kicking off a new, heightened trade war. “Trump’s return could create a short-term boost to Chinese exports as U.S. importers increase their purchases to get ahead of tariffs,” wrote Zichun Huang of Capital Economics in a research note.
The U.S., of course, is not the only economic power ramping up protectionism. This year, the European Union and Canada also imposed tariffs on imports of Chinese electric vehicles. Officials in those jurisdictions are expected to further hike duties, heightening the urgency of making shipments. Exports to the European Union rose 12.6% to $43.5 billion, while imports from the EU fell 6.1% to $21.3 billion. Overall, China exports around a trillion dollars of goods annually, roughly 30% of its overall exports, to the U.S. and Europe.
In October, Chinese exports rose across the board for all kinds of goods. Shipments of agricultural products rose 11% to $9.2 billion. Sales of high-tech products increased 9.3% to $81.6 billion. Exports of toys rose 4.1% to $3.7 billion. Exports of motor vehicles grew 4% to $10.7 billion. A couple exceptions: shipments of mobile phones declined 0.4% to $18.6 billion, and sales of footwear fell 1.1% to $3.4 billion.
With trading partner after trading partner, China ramped up its trade surplus. Exports to ASEAN nations, which are part of a new Asian supply chain network, increased 16.2% to $48 billion, while imports fell 7% to $34 billion. Exports to Africa increased 21.1% to $16 billion, while imports shrank 8.2% to $9.2 billion. Exports to Russia increased 26.7% to $11 billon, part of an integration of the two massive economies since Russia invaded Ukraine. Imports, however, fell 3.9% to $10.8 billion. Exports to Latin America increased 23.1% to $23.6 billion, while imports fell 10.4% to $18.6 billion
Imports of ag products fell 4.9% to $16 billion. Shipments to China of high-tech products rose 9.1% to $67.9 billion. Imports of natural gas rose 27.1% to $5.4 billion. Imports of coal rose 14.4% to $4.1 billion.
This week, Beijing is set to announce a new package of stimulus measures. One sign it might need it: It is the world’s number one energy importer, and in October Imports of oil dropped 25.3% year-on-year to $24.3 billion by value and 8.7% by quantity to 44.7 million tons.
John W. Miller