Trade between the US and China is drying up. That could be bad news for American consumers

[beijingwalker]

Trade between the US and China is drying up. That could be bad news for American consumers​

Phil Rosen
Jul 12, 2023, 11:58 PM GMT+8

Florida, Fort Myers, Sanibel Outlets Mall, woman shopping in Coach handbag store. Jeffrey Greenberg/Education Images/Universal Images Group via Getty Images

• Trade between the US and China has declined dramatically. Mexico is now the US's top trade partner.
• However, fewer cheap Chinese imports could mean more expensive domestic prices for American buyers.
• Concerns such as national security and supply-chain resiliency have weighed on US-China trade relations.

With ties this year between Washington and Beijing have becoming more and more strained, Chinese imports to the US have tumbled to their lowest level in two decades.

That might be bad news for American consumers.

Deteriorating political ties have weighed on trade between the two world powers. Both China and the US are vying for supremacy in the semiconductor and technology sectors, and there's an ongoing currency war between the yuan and dollar. These concerns, according to a Tuesday report from the Dallas Fed, highlight that today's global trade dynamics no longer look at low prices in a vacuum. National security, policy, and supply-chain resiliency now factor into the equation, too.

This year, Mexico supplanted China as the US's top trading partner, with bilateral trade hitting $263 billion in the first four months of the year. Census Bureau data shows that in the four months up to May, imports from China dropped 25% from a year ago, falling from $175 billion to $130 billion.

In that same stretch, however, US exports to China climbed from $48.8 billion to $49.3 billion.

Mexico surpassed China as the US's top manufacturing trade partner in 2023. Dallas Fed, Census Bureau

To be clear, if companies pivot away from China's cheap production and supply chains, that likely increases costs for those firms, costs which then trickle down to everyday consumers. All things point to the US and China becoming less reliant on one another as time goes on, which suggests prices for goods that were once sourced from China could get more expensive as the US brings more production stateside or closer to home, "nearshoring" operations in neighboring countries like Mexico.

In 2001, China joined the World Trade Organization, a group that grants members preferential tariffs when trading with one another. That access opened the door to China to become a leading trade and manufacturing hub, as the Dallas Fed pointed out.

"Within a decade of its admission, critics increasingly accused China of flooding the world with cheap exports while limiting foreign access to its market," Dallas Fed senior economist Luis Torres said. "China's trade growth coincided with sharp declines in U.S. manufacturing employment. Sectors and regions especially exposed to China's trade tended to experience higher unemployment, lower labor force participation and reduced wage growth."

Mexico, for its part, benefits from increased trade with the US — beating out China in US trade volume means it's climbing on the world stage. But ultimately, because so few countries can compete with China as far as cost efficiency, Americans could be left holding a bigger bill because of Mexico's rise.

"While Mexico benefits from increased trade with the U.S., the impact on U.S. producers and consumers has been mixed," the Dallas Fed's report reads. "To the extent that frictions with China account for Mexico's ascension in the trade rankings, the higher profile comes at a cost to U.S. firms and consumers through higher input and purchase prices."

Trade between the US and China is drying up. That could be bad news for American consumers.

Mexico just took the top spot as America's biggest trade partner as US-China relations continue to sour.

markets.businessinsider.com

 

[Hamartia Antidote]

Things are actually working.

 

[beijingwalker]

Mexico replaced China and becomes US top trading partner while China's exports to Mexico jumped massively, everyone can see the connection in this game
Poor American consumers...

 

[dbc]

Mexico replaced China and becomes US top trading partner while China's exports to Mexico jumped massively, everyone can see the connection in this game
Poor American consumers...

View attachment 938944

The term is reverse disintegration of supply chain.

What China is beginning to experience is reverse disintegration, It starts with assembly of semi-finished products overseas and then in a few years the entire supply chain is transferred overseas. We see it happening with electronics, Chinese suppliers are already setting up plants in Vietnam and India and soon the entire supply chain will relocate. It takes time, but on the whole I’d rather Mexico benefit from US trade and get rich. Obviously at the start of this phenomenon the volume of trade will spike as factories in China transfer factory equipment overseas.

 

[beijingwalker]

The term is reverse disintegration of supply chain.

What China is beginning to experience is reverse disintegration, It starts with assembly of semi-finished products overseas and then in a few years the entire supply chain is transferred overseas. We see it happening with electronics, Chinese suppliers are already setting up plants in Vietnam and India and soon the entire supply chain will relocate. It takes time, but on the whole I’d rather Mexico benefit from US trade and get rich. Obviously at the start of this phenomenon the volume of trade will spike as factories in China transfer factory equipment overseas.

China is different, it boasts both manufacturing production might and the world biggest market, besides, we are living an interesting time when robots take over a lot of human places, no country can ever take China's place in this global supply chain, this is almost an undisputed consensus reached by global business leaders.

 

[dbc]

China is different, it boasts both manufacturing production might and the world biggest market, besides, we are living an interesting time when robots take over a lot of human places, no country can ever take China's place in this global supply chain, this is almost an undisputed consensus reached by global business leaders.

So no other country can produce anything? China is ordained by God to be the sole producers for all humanity.

 

[beijingwalker]

So no other country can produce anything? China is ordained by God to be the sole producers for all humanity.

No country can replace China's role in the global supply chain, of course every country can produce something, don't try to be stupid.

 

[khansaheeb]

Trade between the US and China is drying up. That could be bad news for American consumers​

Phil Rosen
Jul 12, 2023, 11:58 PM GMT+8

Florida, Fort Myers, Sanibel Outlets Mall, woman shopping in Coach handbag store. Jeffrey Greenberg/Education Images/Universal Images Group via Getty Images

• Trade between the US and China has declined dramatically. Mexico is now the US's top trade partner.
• However, fewer cheap Chinese imports could mean more expensive domestic prices for American buyers.
• Concerns such as national security and supply-chain resiliency have weighed on US-China trade relations.

With ties this year between Washington and Beijing have becoming more and more strained, Chinese imports to the US have tumbled to their lowest level in two decades.

That might be bad news for American consumers.

Deteriorating political ties have weighed on trade between the two world powers. Both China and the US are vying for supremacy in the semiconductor and technology sectors, and there's an ongoing currency war between the yuan and dollar. These concerns, according to a Tuesday report from the Dallas Fed, highlight that today's global trade dynamics no longer look at low prices in a vacuum. National security, policy, and supply-chain resiliency now factor into the equation, too.

This year, Mexico supplanted China as the US's top trading partner, with bilateral trade hitting $263 billion in the first four months of the year. Census Bureau data shows that in the four months up to May, imports from China dropped 25% from a year ago, falling from $175 billion to $130 billion.

In that same stretch, however, US exports to China climbed from $48.8 billion to $49.3 billion.

Mexico surpassed China as the US's top manufacturing trade partner in 2023. Dallas Fed, Census Bureau

To be clear, if companies pivot away from China's cheap production and supply chains, that likely increases costs for those firms, costs which then trickle down to everyday consumers. All things point to the US and China becoming less reliant on one another as time goes on, which suggests prices for goods that were once sourced from China could get more expensive as the US brings more production stateside or closer to home, "nearshoring" operations in neighboring countries like Mexico.

In 2001, China joined the World Trade Organization, a group that grants members preferential tariffs when trading with one another. That access opened the door to China to become a leading trade and manufacturing hub, as the Dallas Fed pointed out.

"Within a decade of its admission, critics increasingly accused China of flooding the world with cheap exports while limiting foreign access to its market," Dallas Fed senior economist Luis Torres said. "China's trade growth coincided with sharp declines in U.S. manufacturing employment. Sectors and regions especially exposed to China's trade tended to experience higher unemployment, lower labor force participation and reduced wage growth."

Mexico, for its part, benefits from increased trade with the US — beating out China in US trade volume means it's climbing on the world stage. But ultimately, because so few countries can compete with China as far as cost efficiency, Americans could be left holding a bigger bill because of Mexico's rise.

"While Mexico benefits from increased trade with the U.S., the impact on U.S. producers and consumers has been mixed," the Dallas Fed's report reads. "To the extent that frictions with China account for Mexico's ascension in the trade rankings, the higher profile comes at a cost to U.S. firms and consumers through higher input and purchase prices."

Trade between the US and China is drying up. That could be bad news for American consumers.

Mexico just took the top spot as America's biggest trade partner as US-China relations continue to sour.

markets.businessinsider.com

Mexico have their own issues and the Cartels and their interests would spread more into the US.

 

[beijingwalker]

Mexico have their own issues and the Cartels and their interests would spread more into the US.

We don't care about Mexicans resell made in China products to US and get a cut, a win win for both China and Mexico.

 

[khansaheeb]

We don't care about Mexicans resell made in China products to US and get a cut, a win win for both China and Mexico.

Are you saying China is moving to Mexico that's a reasonable solution.

 

[merzifonlu]

This "bar fight of two drunks" coincided with the moment of global warming. It will make everything more expensive by unnecessarily complicating supply chains. This will turn the difficult struggle against global warming into an impossible struggle, thus endangering the existence of humanity. I hope everyone comes to their senses soon.

 

[beijingwalker]

This "bar fight of two drunks" coincided with the moment of global warming. It will make everything more expensive by unnecessarily complicating supply chains. This will turn the difficult struggle against global warming into an impossible struggle, thus endangering the existence of humanity. I hope everyone comes to their senses soon.

China is not drunk, but US is totally wasted and insists to fight, what can China do?

 

[dbc]

We don't care about Mexicans resell made in China products to US and get a cut, a win win for both China and Mexico.

You get a cut today but tomorrow you get cut. Because shipping semi finished goods from China to Mexico and then reexporting to the US isn’t sustainable for any business.

 

[Hamartia Antidote]

Mexico replaced China and becomes US top trading partner while China's exports to Mexico jumped massively, everyone can see the connection in this game
Poor American consumers...

That would be true if most brands sold in the US were Chinese owned and they could easily sneak finished goods into Mexico and simply re-badge them...but most brands aren't...in fact there are only a handful of Chinese brands that have any marketshare in the US (like Haier and some TV/computer/phone brands like TCL/Hisense/Lenovo).

It's mostly US companies that are like Apple where they design things in the US and then have them built at locations around the world at the cheapest price.

So a company like Whirlpool isn't going to risk getting nailed with Chinese washing machines rebadged with "Made in Mexico".

As long as Chinese brands have no significant marketshare in consumer goods we'll be fine.

 

[beijingwalker]

That would be true if most brands sold in the US were Chinese and they could easily sneak finished goods into Mexico and simply re-badge them...but they aren't.

It's mostly US companies that are like Apple where they design things in the US and then have them built at locations around the world at the cheapest price.

So a company like Whirlpool isn't going to risk getting nailed with rebadged Chinese washing machines.

The massive jump of the Chinese exports to Mexico must be for a reason, it's abnormally explosive growth, if not for this reason, must be for some other reasons.