us china trade

Outlook on US-China Trade: 2021

By | 2023-11-08T00:04:03+00:00 August 29th, 2021|Uncategorized|

The US / China Trade has been the focus of much concern for the international trade community at large. And more specifically, US trade professionals (and Chinese trade professionals, in theory) have been keeping a close eye on the situation as it develops. The regulatory changes as a result of this long-held “trade war” have significant impacts on the operations of many in the importing and exporting community.

While the pandemic kept things stale for a while, the truth is that now, as certain virus-related issues are starting to go away, we see that the US / China Trade is actually improving in the coming months and years. This is quite exciting for many of us in the industry!

Before we head into the topic, here are some pieces for recommended reading: 

The US/China Trade War: Managing Chinese Import Tariffs

The US Tariffs on China List: What it Means for Consumers

Market Challenges & Opportunities in Trade 2021

A Brief History in American Trade Wars

We are pulling information from a June 2021 US/China update from Forbes by finance and economics writer, Milton Ezrati.

What we’ve noted is that the US imports from China have stagnated in recent years, however, the movement of goods between the US and China continue to grow from — 2021 onwards.

Lifting the pandemic restrictions brought the shift of supply chains, and based on the Commerce Department, the US increased its import of goods by around 33.7% in 9 months. However, Chinese imports increased only with 6.9%, a clear sign that there are certain outstanding issues that still need to be solved at the political/regulatory level.

us china trade war

Why has US/China Trade gotten this way?

The reason behind this change is mostly related to supply chain security. China kept some vital commercial products to themselves, but in doing that, the US had to find additional diverse sources that would fulfill their needs and requirements. Then there are other factors to consider in addition. For example, in recent years the Chinese labor costs have increased exponentially when compared to other countries like Indonesia, Vietnam, and Latin America.

Since Chinese costs are higher due to the faster development of the country, the US had to find some alternatives in order to maintain the best approach. The US had to look elsewhere to source many low-tech products like shoes and textiles.

What does the US/China relationship look like going forward?

China has promised that they would not steal US technology and they also promised to buy more American products. And yes, that’s exactly what happened! After that deal was signed, the amount of goods between the US and China increased with a 14.5% rate, when the previous yearly growth rate was 0.6% — a huge bump!

That means the US / China trade war is getting better for both parties, although that is happening at a very slow pace at this time. Whether the issue will ever be resolved completely or not — it all depends on the progress made at the regulatory level. With that being said, it all comes down to politics, statistics and economics, but the potential is definitely there.

Until this point, the US / China trade war has continued to be a major problem, so it’s great to see that one of the major tension sources is going away. It shows that yes, a peaceful agreement can be reached, and despite any issues that arise, there are still many great things to look forward to in the long run.

We expect the situation to improve, especially if the US continues to export so many items to China. Only time can tell, but it’s great that the tension is at least going away!

If you’d like support in managing your importing relationships, especially at the port of entry, you must partner with an experienced customs broker. To start the conversation with a broker, click here.