China’s trade surplus with US hits all-time high as tariffs backfire

When the trade standoff between the world’s largest economies intensified in recent weeks, market watchers had cautioned that a further escalation of the tension might derail international trade. In what could be termed a fresh recipe for a full-fledged trade war, Beijing’s trade surplus with the US jumped to a record high in June.

Latest statistics reveal that China’s exports to America increased at a faster pace last month than its imports from the US. The resultant trade surplus, $28.97 billion, is the highest ever recorded by the country since records started. Electronic goods and mechanical products accounted for the lion’s share of the commodities exported to the US.

There is a proportionate surplus during the six months ended June when the US topped among the export partners of China, which also registered a sharp growth in overall shipments globally during the period. The demand for Chinese goods got a boost from the ongoing global economic recovery, and the country’s exports exceeded economists’ projections this year.

Meanwhile, some experts attribute the upsurge in shipments mainly to the strengthening of the Chinese currency against the dollar, and to some extent a race among local exporters to push as much merchandise as possible before the latest tariffs imposed by Washington take effect.

The $28.97-billion trade surplus is the highest ever recorded by the country since records started

The widening trade imbalance raises concerns of a further escalation in the hostility between the two countries, because it could result in Trump rolling out a fresh round of sanctions against China. What’s worse, it comes at a time when the POTUS is toying with the idea of slapping additional tariffs worth several billion dollars on Beijing.

But, the sharp contraction in imports is not a good sign as far as the Asian giant is concerned, which is currently witnessing a slowdown in domestic demand. A fall in imports can be directly linked to people’s weakening purchase power and overall economic slowdown.

It needs to be noted that it was such a wide import-export imbalance that prompted Trump to revisit his trade policy last year and keep a tab on imports, triggering a series of sanctions and retaliatory actions from America’s trade partners.