China exports to U.S. fall as trade war bites

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Chinese exports to the U.S. have dropped significantly in 2019, providing increasing evidence that the President Trump’s trade war is taking a toll on the bilateral relationship.

U.S. imports from China fell 12.5% in the first eight months of the year, the Census Bureau reported this week.

Meanwhile, Mexico, which is America’s second largest supplier of goods, posted the biggest increase of exports to the U.S..

Imports from China declined $43 billion year on year, while purchases from Mexico rose a substantial 5.5%, or $12.4 billion.

Despite high-level talks between the U.S. and China in Washington expected in mid-October, a range of various items have felt the brunt of the trade spat. The U.S. Commerce Department said this week that China was dumping items such as wooden cabinets in the United States at margins ranging from 4.5% to 262%, Reuters reported.

“The department is also probing whether imports of wood cabinets, vanities and their components from China were being unfairly subsidized and began collecting cash deposits in August to offset the alleged subsidy,” Reuters said.

Shrimp imports from China also fell in August, declining 62% in volume and 71% in value year on year, reveals according to the National Oceanic and Atmospheric Administration.

China has also shown a slowdown in aluminum exports, one of its key metrics, which fell 4.3% in August from the previous month despite a weaker yuan. China is the world’s leading aluminum producer, but last month exported its lowest amount since February.

The U.S. trade deficit with China narrowed in August as exports rose to a five-month high. The trade gap with China shrank to $29 billion from $29.6 billion a month earlier, according to Commerce Department data. Exports increased to $10 billion while imports declined slightly to $39 billion.

The overall U.S. deficit widened to $55 billion in August, which was higher than expected.

Despite the trade war, China’s fall in exports comes as an anomaly. Shipments grew by over 3% in July, but fell by 1% in August. This was markedly below the 2.1% growth predicted by analysts in a Bloomberg poll.

High-level officials, including Vice Premier Liu He, are expected to meet at the White House next week. The talks will be the 13th high-level meetings among there two countries.

The talks come as President Donald Trump faces impeachment inquiries. This week he publicly asked China to investigate dealings of the family of Joe Biden in the country, though no evidence of wrongdoing has been put forward.

Tanner Brown is a contributor to MarketWatch and Barron’s and produces the Caixin-Sinica Business Brief podcast.