Feb 27, 2019

China even stiffs tariff-free U.S. goods during Trump trade war

Reproduced from Institute of International Finance; Chart: Axios Visuals

China imported far fewer goods from the U.S. once the first round of tariffs took effect last July and the country retaliated.

Between the lines: The trade war is to blame for the slowdown, but interestingly imports of U.S. goods that weren't subject to tariffs slowed too when the trade war began.

What's happening: According to new research by the International Institute of Finance, this dynamic is proof that non-tariff measures were also contributing to the decline of U.S. exports to China.

"[This explains] why the US trade deficit with China grew last year. China's retaliation more than offset the impact of U.S. tariffs," IIF Deputy Chief Economist Sergi Lanau and Head of China Research Gene Ma argue.

  • Early on in the trade war, there were concerns that China would retaliate not with tariffs, but with other tactics — including canceling orders for U.S. goods.

Bonus: China is turning to other countries for imports of "animal, vegetable, paper, and mineral products" it used to get from the U.S., Lanau and Ma write.

  • Russia and Brazil are among the countries benefiting most.

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