General

On February 7th local time, the US Department of Commerce released US trade data for 2022. Among them, the US trade deficit in goods and services surged 12.2% compared to the previous year, reaching a record high of 948.1 billion US dollars; The volume of goods trade between the United States and China reached 690.6 billion US dollars, setting a new record after three years; The US trade deficit in goods with China increased by 8% to US $382.9 billion, second only to the record US $419.4 billion deficit in 2018; But at the same time, China has lost its position as the largest trading partner of the United States, for the first time since 2019. From these data, we can glimpse some noteworthy characteristics and trends in current US foreign trade and Sino US trade.

First, since the Trump administration took office, the US foreign trade deficit has only contracted slightly in 2019. In the following three years, the US trade deficit has shown an accelerating trend of expansion. It can be seen that a series of trade protectionism measures implemented by both the Trump and Biden governments have not achieved the expected results. The fundamental reason for the US trade deficit is the imbalance in the domestic economic structure. The "internal disease and external treatment" approach adopted by the US government for some time has certainly not been successful.

Specifically, in 2022, the US trade deficit increased significantly due to three main reasons: First, last year, the US economy grew faster and inflation remained high, stimulating import demand. The second reason is that due to the continuous interest rate increase by the Federal Reserve, the US dollar index has risen to a 20-year high, and the US dollar has significantly appreciated against most currencies, stimulating the growth of US imports and inhibiting US foreign exports. Third, the international crude oil price will rise significantly in 2022 due to the impact of the Russia-Ukraine conflict. Driven by strong domestic demand, the United States will become a net importer of oil again in 2022, and the trade deficit will also be affected by high oil prices.

Secondly, the resilience of Sino US trade has become prominent. Although the United States government still imposes punitive high tariffs on more than $300 billion of goods imported from China to the United States, and a few American politicians strongly advocate the "comprehensive decoupling" of the Chinese and American economies, the latest trade data shows that the economic and trade exchanges between China and the United States are still close, and American enterprises and consumers highly favor Chinese goods, using practical actions to say no to the "decoupling theory.". As for China, which will no longer be the largest trading partner of the United States in 2022, it has a lot to do with the tension in Sino US trade relations and the impact of the COVID-19 epidemic. It is believed that with China's re opening up and the increase of contacts at all levels of economic and trade exchanges between the two countries, China is expected to return to the position of the largest trading partner of the United States in the short term.

However, compared to 2018 before the full impact of the Sino US trade war emerged, there have been some changes in the trade structure between China and the United States. According to data released by the United States, the major growth rates of US imports from China are toys, plastic products, and other daily necessities, with year-on-year growth rates of 7.5% and 4.3% respectively; The fastest growing US exports to China are mainly grain commodities such as soybeans and corn, with a year-on-year growth rate of over 10%. The cost of daily necessities produced in China is relatively low, and the technical level and product cost performance ratio are relatively high, so they are basically not affected by punitive tariffs. However, due to the so-called "small yard and high wall" technology policy implemented by the Biden government, as well as a series of supply chain measures such as "offshore outsourcing" and "friendly offshore outsourcing", the trade volume of high-tech products between the two sides is gradually decreasing, especially the electronic processing trade products in China are significantly affected.

Economic and trade cooperation has always been the "ballast stone" and "propeller" of Sino US relations. It has to be said that in recent years, the United States government has defined Sino US relations with "competition" and adopted a series of trade restrictions and protectionist measures against China, which have in fact harmed the interests of enterprises and the people of both countries. The "Chip and Science Law" and "Inflation Reduction Law" passed by the Biden government in 2022 will be implemented in 2023, indicating that the US government will continue to accelerate subsidies to domestic industries and impose stricter export controls and trade barriers on China. Sino US trade may still continue to move forward in 2023 amid twists and turns.

Finally, influenced by the global economic and trade situation, the trade growth of the United States is expected to significantly slow down in 2023. According to the latest forecast of the World Trade Organization, due to the significantly increased risk of global economic recession, the growth rate of global commodity trade will slow to 1% in 2023 from 3.5% in 2022. As the US Federal Reserve and central banks in some major economies around the world have significantly increased interest rates to curb inflation, international trade has shown a weak trend at the end of last year. The United States Department of Commerce mentioned that the total value of imports of goods and services had declined for two consecutive quarters in the third and fourth quarters of 2022; "Demand for durable consumer goods is slowing after being driven higher during the pandemic, and capital expenditure is also gradually declining, which is putting pressure on imports from the United States.". This trend in American foreign trade also deserves our attention and precautions.