U.S. President Donald Trump is expected to meet with his lead trade advisers later today, Dec. 12. Top of the agenda will be planned Dec. 15 tariffs on a further $160 billion of Chinese goods. Much is at stake.
The trade war between the world’s two largest economies has been the source of global investment uncertainty throughout 2019. Tariffs have damaged economic growth and transport demand, while also causing pricing inflation in the U.S. as the cost of Chinese imports has risen.
As reported in FreightWaves, it has also “sucked the life” out of the trans-Pacific trade, with container volumes exported out of Asia in retreat and volumes shipped from Asia to North America expected to decline for the first time in a decade.
China’s November exports
The extent of the contraction in trade between the two countries was laid bare as China released its export figures for November. Customs data revealed that overseas shipments from China fell 1.1% year-over-year (y/y) in greenback terms, while import growth of 0.3% helped China to narrow its trade surplus to $38.7 billion in November from $42.5 billion in October.
However, while China improved its exports to Southeast Asia, export growth to the U.S. continued to tumble, down 23% y/y in November from a decrease of 16.2% in October. This dragged the year-to-date growth rate down further to 12.5% y/y in November from 11.3% in October.
“After adjusting for Lunar New Year holiday period distortions, the growth rate for exports to the U.S. in November was the lowest single-month reading since January 1996, when the data series was first released by China customs, suggesting strong headwinds from increased U.S. tariffs,” according to Japanese financial services group Nomura.
As reported in FreightWaves, the ongoing U.S.-China trade war has weighed heavily on shipping demand. Drewry forecasts that with eastbound trade from Asia to the U.S. flat after 10 months of the year, and given the strength of the market in the final two months of 2018, “an annual deficit seems inevitable.”
US exports to China see growth
For U.S. exporters to China, however, November offered some respite with Chinese agricultural buyers returning to U.S. grain markets. As a result, China’s growth of imports from the U.S. jumped to 2.7% y/y in November from -14.6% in October.
Nomura said China had boosted agricultural imports from the U.S. to smooth trade negotiations. Front-loading of imports ahead of retaliatory tariffs on U.S. imports scheduled to come into effect on Dec. 15 was also a factor.
“As a result, China’s trade surplus with the U.S. narrowed to $24.6 billion in November from $26.5 billion in October, below the monthly average of $24.8 billion in January-October 2019,” said Nomura. The average trade surplus in 2018 was $27 billion.
More FreightWaves and American Shipper articles by Mike
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