China trade surplus with US hits historic high & timing couldn’t be worse
As the US-China trade war escalates, the latest trade numbers appear to back Washington’s biggest gripe with Beijing. China’s trade surplus with the US has grown to a record high of nearly $29 billion in June.
Analysts expect to see the impact of the tariffs in the coming months, warning of a less favorable trade balance for China.
“We expect the trade numbers for July to disappoint since that’s when the first round of US tariffs took effect,” China analyst at Nordea Bank in Singapore Amy Zhuang told the BBC.
“Still, we do not expect a plunge because those tariffs only targeted $34 billion worth of goods which is fairly small compared to China’s total trade,” she said.
Statistics showed that in the first six months of the year, China’s exports to the US rose 13.6 percent from a year earlier, while imports from the US increased by 11.8 percent. China’s trade surplus with the US over the same period was $133.76 billion, up from $117.51 billion last year.
Last week, the United States and China introduced tariffs of 25 percent on $34 billion of each other’s exports. China’s Commerce Ministry said that Beijing had no choice but to fight back after the US “launched the largest trade war in economic history,” accusing Washington of violating the rules of the World Trade Organization (WTO).
In turn, the Trump administration accused China of not negotiating “seriously” on trade and released on Tuesday a list of $200 billion worth of Chinese exports that could be subject to new 10-percent tariffs. The new tariffs would kick in within 60 days.
If the US proceeds with its proposal for a new round of tariffs on $200bn of Chinese goods, there could be knock-on effects, Amy Zhuang warned. “Not only will Chinese exporters suffer but American consumers as well,” she said.
“Targeting such a large amount of basic consumers will inevitably have an effect on US inflation.”
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