Mar 7, 2018

The scale of the U.S.-China trade deficit

President Trump previewed a plan of action this morning to reduce the U.S.-China trade deficit on Twitter, saying, "China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States."

By the numbers: A reduction of $1 billion would comprise just a tiny fraction of the $375.2 billion trade deficit that the U.S. had with China in 2017. That deficit has been expanding since 1985 and, in 2016 alone, it grew by over $28 billion.

Data: U.S. Census Bureau; Chart: Andrew Witherspoon / Axios
The facts
  • China's global profile grew when it was allowed to join the World Trade Organization in 2001. Membership in the WTO entitled China to the stable tariff rate enjoyed by other members.
  • Since then, Chinese exports have taken over the world. China has quickly emerged as a manufacturing powerhouse, often buying raw materials from the U.S. and other nations and exporting the finished products back to the States.
  • In 2017, the U.S. imported $505.6 billion worth of goods from China. While U.S. exports to China have grown as well, they've risen at a much slower rate.
  • Yes, but: With various U.S. economic figures — such as industrial output and exports — at or near record highs in 2017, China's rise hasn't come at the U.S.'s economic expense, per Scott Lincicome, a trade policy expert at the Cato Institute:
"We like to think of global trade as an expanding pie. Your share might decline relative to other countries, but that's fine as long as your domestic indicators are doing better than they were last year."
Where things stand
  • Trump plans to announce his steep tariffs — 25% on steel and 10% on aluminum — on Thursday. The across-the-board tariffs will not only impact Chinese exports to the United States but also will apply to close allies as well. The European Union has already announced a round of politically-targeted tariffs against the U.S. in response to Trump's trade moves.
  • Trump also tweeted about China's theft of U.S. intellectual property, which has been a continual flash point in U.S.-China relations. There had been plans to punish China with tariffs based on that threat stretching back to the Obama administration, indicating a much wider level of support for that action.
The bottom line
These tariffs may be the last moment when America gets to set the terms of engagement with China.
— UC Hastings law professor Frank Wu at a Brookings event Wednesday

Go deeper

There are warning signs that Nevada could be Iowa all over again

Former Sen. Harry Reid (D) lines up to cast an early vote for the upcoming Nevada Democratic presidential caucus. Photo: Ethan Miller/Getty Images

The alarms are increasingly sounding over Nevada's Democratic caucus, which is just five days away.

Why it matters: Similar issues to the ones that plagued Iowa's caucus seem to be rearing their ugly heads, the WashPost reports.

China tries to contain coronavirus, as Apple warns of earnings impact

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's NHC; Note: China refers to mainland China and the Diamond Princess is the cruise ship offshore Yokohama, Japan. Map: Danielle Alberti/Axios

As China pushes to contain the spread of the novel coronavirus — placing around 780 million people under travel restrictions, per CNN — the economic repercussions continue to be felt globally as companies like Apple warn of the impact from the lack of manufacturing and consumer demand in China.

The big picture: COVID-19 has now killed at least 1,775 people and infected more than 70,000 others, mostly in mainland China. There are some signs that new cases are growing at a slower rate now, although the World Health Organization said Monday it's "too early to tell" if this will continue.

Go deeperArrowUpdated 4 hours ago - Health

Apple will miss quarterly earnings estimates due to coronavirus

Apple CEO Tim Cook

Apple issued a rare earnings warning on Monday, saying it would not meet quarterly revenue expectations due to the impact of the coronavirus, which will limit iPhone production and limit product demand in China.

Why it matters: Lots of companies rely on China for production, but unlike most U.S. tech companies, Apple also gets a significant chunk of its revenue from sales in China.