China trade surplus with U.S. hits historic high & timing couldn’t be worse

Andrew Cummings
July 14, 2018

China's trade surplus with the U.S. widened to a record in June, risking further escalation of a a bitter trade dispute with Washington.

Others say the latest data shows how hard it will be for the U.S. to win the trade war, arguing that Americans want to buy Chinese-made products.

China's trade surplus widened sharply amid escalating trade tensions with the US, which is preparing to impose fresh tariffs on a further $200 billion in Chinese goods. China also said both its imports and exports with the USA rose in the first half of 2018.

Washington added 25 per cent tariffs on $34 billion of Chinese goods on July 6 in response to complaints Beijing steals or pressures companies to hand over technology. That leaves about $80 billion for penalty tariffs after Beijing's previous increases either imposed or threatened on a total of $50 billion of USA goods are counted.

Analysts expect to see the impact of the tariffs in July's figures.

"Looking ahead, export growth will cool in the coming months as USA tariffs start to bite alongside a broader softening in global demand", Capital Economics analyst Julian Evans-Pritchard said in a statement. Its trade surplus with the United States over the same period was $133.76bn, up from $117.51bn previous year.

China's June trade grew by double digits amid mounting tensions with Washington but Beijing warned its exporters to face "rising instabilities and uncertainties".

US President Donald Trump had already threatened to impose additional tariffs if China - the world's largest exporter - retaliates.

The trade balance between the two countries, which is at the centre of the trade dispute, continued to move in favour of China. They said as a effect figures for July and August were likely to show a decline in exports to the US.

"Targeting such a large amount of basic consumers will inevitably have an effect on U.S. inflation".

David Kuo, chief executive of the Motley Fool Singapore, said "US tariffs will increase the cost of Chinese imports but they are unlikely to deter United States consumers entirely".

Earlier this week Donald Trump proposed a 10% tariff on $200bn of Chinese goods entering the USA, saying that tariffs already in place on steel and aluminium imports and $34bn of goods had failed to force significant reforms by Beijing.

"So we would be back to square one", Mr Kuo said, with China exporting more to the United States than it buys from the country.

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