Treasury secretary Janet Yellen's trip to China this week is taking place as trade between the two countries is plunging.

Why it matters: For all that fireworks sales rose again this year — nearly all of them sourced from China — imports from China to the U.S. totaled $130 billion over the four months from February through May. That's down 25% from $175 billion a year ago.

The big picture: Both as a percentage of total imports and as a percentage of GDP, Chinese imports are now at the lowest they've been in 20 years.

• The other side: U.S. exports to China are going up rather than down. Over the same four-month period they totaled $49.3 billion, up slightly from $48.8 billion in 2022.

Be smart: Shrinking imports aren't necessarily a good thing. After all, it's not just fiscal policy and monetary policy that affect inflation; trade policy does too.

• When companies reshore their supply chains and cut Chinese imports, that invariably increases costs — to the companies concerned and, ultimately, to their U.S. customers.
• That's why Yellen tried (and failed) to roll back some of the Trump-era tariffs on China.
• "We should not allow any disagreement to lead to misunderstandings that needlessly worsen our bilateral economic and financial relationship,” Yellen said in Beijing yesterday.

Between the lines: As the NYT detailed this week, relations between the U.S. and China are at their lowest point since 1979. Both countries are trying to hobble the other when it comes to semiconductor technology, with the U.S. specifically looking to ban certain high-tech investment in China, and China restricting the export of gallium and germanium, which are used to make semiconductors.

• That move "will not only cause panic in certain countries, but also exert heavy pain in them," said government mouthpiece China Daily.
• The U.S., meanwhile, is particularly upset about human rights abuses, China's role in international debt workouts, and the weak yuan.

The bottom line: The less that two countries trade with each other, the less reliant they are on each other. Yellen's trip, alongside that of Secretary of State Tony Blinken last month, looks like an attempt to shore up with diplomatic relations what has been lost economically.

Ignore any headlines you remember from earlier this year about the trade deficit with China being at record highs. Those days are over.

Between the lines: The shrinking deficit shouldn't be taken entirely at face value. Council on Foreign Relations fellow Brad Setser tells Axios there are a few reasons to add an asterisk to these figures:

1. Country of origin rules: Thanks to the Trump tariffs, a lot of companies are doing final assembly of their goods in countries like Vietnam, Malaysia, or Taiwan. Even if the earlier parts of the supply chain are in China, the imports are registered as coming from other countries.
2. Base effects: In 2021, there was a huge backlog at U.S. ports. As the backlog cleared up in 2022, it artificially increased imports for that year.
3. Reporting: Tariffs get levied on things the Americans consider to be imports, and those things are down. Look at Chinese export data, however, and the numbers look very different. The natural conclusion is that China's exports have, somehow, become things that the U.S. doesn't officially consider to be imports. (See item 3, below.)

The bottom line: Trade between the U.S. and China is shrinking, says Setser, but "the deep diversification of supply chains that is now sought by U.S. policy is only just starting."

Not all Chinese imports get registered as imports. Specifically, if a shipment falls beneath a certain "de minimis" value, it neither gets inspected nor taxed by U.S. Customs.

• That de minimis value is $800 — high enough to cover effectively all of the shipments from Chinese fast-fashion giants Shein and Temu.

What they're saying: "The de minimis provision is foundational to Shein and Temu’s business models," finds a House of Representatives report into the companies.

By the numbers: Shein and Temu between them ship about 600,000 packages per day to the U.S. under the de minimis exception.

• The Gap, a company that sources clothing in China and ships it in bulk, paid about $700 million in import duties in 2022. Shein and Temu, by contrast, paid nothing.

The bottom line: If Shein does decide to go public in the U.S., possible changes to the de minimis rule will be very high up on its list of risk factors.

Remember when a brief spike in UK government bond yields caused the downfall of Prime Minister Liz Truss after just 45 days in office? It turns out those bond yields were just a sign of things to come.

Why it matters: UK interest rates have a direct effect on discretionary income, since most UK mortgages reprice every two years.

• Barclays CEO C.S. Venkatakrishnan estimates that UK homeowners will be spending as much as 30% of their income on mortgage payments, up from about 20% previously.

The bottom line: The combination of high inflation, broad homeownership, and very short-term mortgages is disastrous for PM Rishi Sunak and for the entire UK economy.

In Wisconsin, the governor can veto the tiniest parts of a bill, even unto deleting the first two digits of a year and the hyphen following them.

Why it matters: Thus does "2024–25" become "2425," and thus does a spending increase designed (by the legislature) to last for two years become one designed (by the governor) to last for over 400 years.

What they're saying: "Through the governor’s veto, the budget provides per pupil revenue limit adjustment authority of $179 plus $146 for a total of $325 in each year from 2023-24 until 2425," says Wisconsin Governor Tony Evers' official press release. (Evers, it's worth noting, is a former state education secretary and teacher.)

• In other words: Assuming the legislature doesn't change the law in the future, school districts are allowed to increase their revenues by $325 per pupil per year for the next 402 years.

The bottom line: As Otto von Bismarck famously said: "Laws are like sausages, it is better not to see them being made."

Last week I went to a Steve Reich concert in the Sonic Sphere, a $2 million 250-capacity music venue suspended from the roof of The Shed, in Manhattan.

• A scaled-up version of legendary composer Karlheinz Stockhausen's 1970 Kugelauditorium, it's designed to be a whole new way of listening to music, with 100 speakers surrounding every audience member from every direction.

Driving the news: If you scale up the spending by three orders of magnitude and drop $2.3 billion on an immersive spherical entertainment venue, what you end up with is The Sphere Las Vegas, which announced its arrival on Tuesday by lighting up its 580,000-square-foot external LED skin, or "exosphere."

• Expect that exosphere to show a lot of ads going forward, in an attempt to defray some of those construction costs.

Go deeper: Inside the sphere is an 18,600-seat auditorium with its own immersive LED ceiling — much smaller than the exosphere, but still huge. Rather than 100 speakers, the interior of The Sphere has about 170,000 of them.

• By the numbers: Tickets to U2 concerts in October are available starting at just over $500.

The bottom line: Ticketed experiential entertainment is not just for art shows any more — it's inevitably going to encroach on live entertainment.

• Even if U2 show up in person to play The Sphere's opening nights, the real revenue potential here is to sell tickets to prerecorded shows around the clock.
• Steve Reich might not be able to reliably sell 18,000 seats to a Las Vegas crowd, but surely Michael Jackson could.

Taylor Swift is set to gross more than $1 billion from her current tour, and total expenditures from concertgoers could reach $5 billion by the time it's finished.