Dec 9, 2019 - Economy & Business

The trade war is kind of working

Illustration: Lazaro Gamio/Axios

U.S. manufacturers and small businesses have been hit hard by the trade war, but recent data shows that China is really suffering.

Driving the news: China's total exports fell for the 12th straight month in November, dropping 1.1% from a year ago, and exports to the U.S. have fallen more than 20%, according to China’s customs administration.

  • Economists had expected shipments to rise 1%, as retailers and companies stock up for Christmas, per Reuters.

What's happening: The U.S. trade deficit declined 7.6% in October to $47.2 billion, the smallest since May 2018, as both imports and exports of goods fell. It was the second straight month the trade deficit has fallen and the largest drop since January.

  • The goods trade deficit — a key benchmark of the Trump administration — is at its lowest since September 2017.
  • China’s trade surplus fell to $38.73 billion in November, about $8 billion below what it was expected to be.

By the numbers:

  • 27.4% drop in the goods trade deficit in October.
  • 23.1% year-over-year decline of U.S. imports from China.
  • 2.8% year-over-year decline in U.S. exports to China.

What they're saying: "There’s little reason for the Trump administration to back away from tariffs as the pressure on China is working," analysts from S&P Global Market Intelligence note.

But, but, but: The goods trade deficit with the EU increased 20% during the month, with U.S. imports from the EU surging to a record high, so American business owners aren't necessarily reaping the benefits.

  • The Commerce Department also reported that factory orders increased 0.3% in October, but shipments were unchanged and unfilled orders were flat, indicating the recession in the U.S. manufacturing sector could continue for some time, Reuters notes.

Go deeper:

Go deeper

The better-than-expected but also terrible durable goods report

Photo: Buena Vista Images/Getty Images

Orders for U.S. durable goods — long-lasting items like sheet metal or motors — rose 2.4% in December, but 90% of that increase was from government defense purchases. Excluding that category, orders fell 2.5%.

Worth noting: New orders for nondefense capital goods excluding aircraft fell 0.9%, the biggest drop in eight months.

Go deeperArrowJan 29, 2020

U.S. GDP growth slows to 2.3% in 2019

Data: Bureau of Economic Analysis; Note: Shows GDP average over the full year vs. prior year; Chart: Andrew Witherspoon/Axios

U.S. gross domestic product grew at a 2.1% annual rate in the final quarter of last year, the Commerce Department said on Thursday. For all of 2019, economic growth came in at 2.3% — less than the 2.9% in 2018.

Why it matters: The initial estimates from the government show that 2019 was the slowest pace of economic growth since Trump took office. The boost from the tax cuts gave way to pain from the trade war. Exports slumped last year, while uncertain business leaders held off on spending.

Go deeperArrowUpdated Jan 31, 2020 - Economy & Business

Farmers hoping for more "Trump money" in 2020

Illustration: Lazaro Gamio/Axios

U.S. farmers have been given a bit of a lifeline by the "phase one" U.S.-China trade deal, but without concrete specifics on what China will purchase there remains some worry about how they will be able to support themselves and their farms in 2020.

Background: Farmers had a rough 2019, even with a hefty subsidy package provided to them by the Trump administration as relief from the trade war.