China Trade Immune So Far to Tariffs With Growth Pickup in April
Chinese trade flows have held up in April despite the imposition of punitively high duties by Donald Trump, as the US president spared many electronic products from some of his levies and paused the wave of tariffs he plans against most countries.
Chinese ports processed 6.3 million containers in the seven days through April 20, official data showed on Monday. That’s an increase of 10% from the same week last year, according to Bloomberg calculations, a stretch of growth that now extends to nearly three months.
The vast majority of Chinese exports by volume travel by sea, with some higher-value goods going by air. Some products are also transported by train to Europe and neighboring countries in Asia.
While the continued strength of trade is a surprise given the magnitude of tariffs imposed by the US and China against one another, the resilience likely also reflects a 90-day delay in Trump’s imposition of his so-called reciprocal duties on dozens of other partners. It meant Asia suffered less of a disruption in trade and possibly allowed China to divert shipments elsewhere.
Another decision announced by the US this month exempted smartphones, computers and other electronics from reciprocal tariffs, providing some relief for Chinese exporters since the exclusion covers more than $100 billion in goods from the country, according to data compiled by Gerard DiPippo, associate director of the Rand China Research Center.
Trade Decoupling
“US-China bilateral trade is set to completely decouple,” economists at Australia & New Zealand Banking Group said in a report.
US exports to China will fall rapidly, but “the decline in US import from China is expected to be more gradual,” they said. “Given a different degree of substitutability, China’s retaliation could lead to an enlarged US trade deficit with China, rather than a reduction.”
It’s probably a matter of time before the tariff war inflicts more serious damage on trade between the world’s two biggest economies. Washington and Beijing have imposed levies above 100% on much of their bilateral commercial flows.
China already reduced some imports from the US sharply last month. So far, however, it appears US buyers are still trying to get goods from China, with the Port of Los Angeles expecting 13 ships from Chinese ports to dock just this week.
The Port of LA, the busiest container gateway in the US, is forecasting more than 120,000 containers from all origins will be offloaded this week, just below the level in the prior seven days and higher than most weeks so far this year.
In addition to sea cargoes, air freight levels are also holding up. That was likely boosted by sales surging on online shopping apps run by Temu and Shein.
The companies saw their sales rebound in March and April, according to Bloomberg Second Measure, which analyzes credit and debit card data.
The strain is beginning to show in some areas of China’s trade. The volume of cargo carried on the China-Europe train links declined almost 10% in the first quarter, according to Caixin Global, which cited data from China State Railway Group.
US shoppers are stockpiling products like makeup brushes and home appliances before the US government ends an exemption for small packages worth up to $800 in May.
Both Shein and Temu will raise prices for US consumers this week “due to recent changes in global trade rules and tariffs” the companies said recently. Prices could rise further in May, cutting into demand and trade.
Source : Bloomberg
