General

On February 7 local time, the United States Department of Commerce released the US trade data for 2022. Among them, the US trade deficit in goods and services soared by 12.2% from the previous year to 948.1 billion US dollars, a record high; The trade volume of goods between the United States and China reached 690.6 billion US dollars, setting a new historical high three years later; The US trade deficit in goods with China increased by 8% to $382.9 billion, second only to the record breaking $419.4 billion deficit in 2018; But at the same time, China 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.

Firstly, 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 been accelerating and expanding. From this, it can be seen that the series of trade protectionism measures implemented by both the Trump and Biden governments did not have the expected effect. The fundamental reason for the US trade deficit is the imbalance of domestic economic structure, and the "internal disease external treatment" approach adopted by the US government for a period of time has certainly not been successful.

Specifically, in 2022, the US trade deficit has significantly increased due to three main reasons: firstly, last year the US economy grew at a high rate, with inflation levels remaining high, stimulating import demand. The second reason is that due to the continuous interest rate hikes by the Federal Reserve, the US dollar index has risen to a 20-year high, and the US dollar has significantly appreciated against the vast majority of currencies, stimulating the growth of US imports and suppressing 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 US government still imposes punitive high tariffs on over $300 billion worth of goods imported from China to the United States, and a few US politicians strongly advocate for a "comprehensive decoupling" of the Chinese and US economies, the latest trade data shows that the economic and trade exchanges between China and the United States are still close, and American companies and consumers highly favor Chinese goods, and use 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 between China and the United States and the impact of the COVID-19. It is believed that with China's re opening up and the increase of bilateral economic and trade exchanges and other contacts at all levels, 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 main growth rates of imports from China in the United States are toys, plastic products, and other daily necessities, with year-on-year growth rates reaching 7.5% and 4.3% respectively; The fastest-growing exports from the United States 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 cost-effectiveness of products are relatively high, so they are basically not affected by punitive tariffs. However, due to the so-called "small courtyard high wall" technology policy implemented by the Biden administration, as well as a series of supply chain measures such as "nearshore outsourcing" and "friendly shore outsourcing", the trade volume of high-tech products between the two sides is gradually decreasing, especially China's electronic processing trade products are significantly affected.

Economic and trade cooperation has always been the "ballast" and "propeller" of Sino US trade relations. It has to be said that in recent years, the US government has defined China US relations as "competition" and adopted a series of trade restrictions and protectionist measures against China, which have actually harmed the interests of businesses and people in both countries. The "Chip and Science Act" and "Inflation Reduction Act" passed by the Biden administration 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 amidst twists and turns in 2023.

Finally, influenced by the global economic and trade situation, trade growth in 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 in 2023 will slow down from 3.5% in 2022 to 1%. As the Federal Reserve and central banks of some major economies around the world significantly raised interest rates to curb inflation, international trade had shown a weak trend by the end of last year. The United States Department of Commerce mentioned that the total import value of goods and services has declined for two consecutive quarters in the third and fourth quarters of 2022; The demand for durable consumer goods is slowing down after being boosted during the pandemic, and capital expenditure is also gradually decreasing, which is putting pressure on imports to the United States. This trend in US foreign trade is also worthy of our attention and preparation.