Record Breaking US-China Trade Despite Widening Political Divide
The merchandise trade between the United States and China reached a record high in 2022, reaching a total of $690.6 billion, as per data from the Commerce Department. Despite the increasing political and economic differences between the two governments, consumers and companies in the world’s largest economies still have strong connections. The annual goods trade deficit between the two countries rose to $382.9 billion, the highest on record after 2018. The relationship between the two countries is under threat from their diverging views on various issues, including human rights, trade, and competition in technology and markets.
The Biden administration has imposed tariffs on China and has expressed concerns over human rights violations, unfair trade practices, and threats to US national security. However, many US businesses have called for the removal of the tariffs, saying that they have raised their costs during a time of increasing inflation. There is little indication that the White House is willing to remove the tariffs as they serve as leverage against China and removing them would be politically risky.
The semiconductor industry remains a major flashpoint for trade tensions, as US companies control most of the underlying chip technology, while China is the largest manufacturer of phones and computers. Officials from both sides are working towards managing their differences, but the relationship has taken a hit due to a recent shooting down of a suspected Chinese spy balloon in US territory. China remained the third largest US trading partner for goods, accounting for 13% of total trade.
In conclusion, despite the political and economic differences between the United States and China, their trade relationship continues to flourish, and the value of merchandise exports to China reached an all-time high of $153.8 billion in 2022.