President Donald Trump will meet with Chinese President Xi Jinping today for the first time, at Trump’s Mar-a-Lago Resort in Florida. While the situation in North Korea is likely to feature in the talks, President Trump himself admitted that trade with China was the elephant in the room that need to be addressed.

“The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits ... and job losses. American companies must be prepared to look at other alternatives,” he said in a series of tweets last week.

President Trump has repeatedly talked tough on China, accusing the Asian economic powerhouse of manipulating its currency. “Every other country lives on devaluation," Trump said earlier this year according to Reuters.  "You look at what China's doing, you look at what Japan has done over the years. They – they play the money market, they play the devaluation market and we sit there like a bunch of dummies."

The economy was the major focus for Trump during the presidential election and many consider voter anxiety over jobs as one of the reasons Trump won the race. While Trump denounces U.S. trade deficits with countries like China and Mexico, the truth is that many companies and jobs in the country are dependent on this trade.

U.S. – China Trade

China is America’s second largest trade partner behind Canada. In 2016, U.S. imports from china exceed exports by $347 billion, while that figure was $54 billion for the first two months of this year. The trade deficit for the month of February was $22.9 billion, over $8.4 billion lower compared to January.

Based on origin and destination of the goods data, California accounts for nearly a third of that deficit, $7.7 billion, for the month of February even though it is the largest exporter among all states to China with exports worth $1.36 billion.

Last year, over 35% of goods imported into California came from China while the Asian country was California’s third largest export destination after Mexico and Canada.

 

The largest component of the California-China trade are computer and electronic parts including – of course – iPhones. While Apple’s supply chain details that some parts are sourced from countries other than China, since the phones are assembled there, any phones not sold in China are considered the Asian giant’s exports. In 2014, A Financial Times report quoted Bank of America Merrill Lynch’s China Economist saying the iPhone 6 could add to China’s export growth by 1% each month. (See also: 10 Major Companies Tied to the Apple Supply Chain.)

Louisiana on the other hand, is the state with the largest trade surplus with China at $758 million (nearly 10% of California’s deficit) in February. The biggest driver for this is the state’s exports of oilseeds (e.g. soybean and cotton) and grains that totaled about $470 million.

According to the Department of Agriculture, in February the U.S. exported about $1 billion worth of soybeans to China out of the total agricultural exports of $1.9 billion. Last year, soybeans accounted for over 22% of all exports from Louisiana and more than 16% of all products exported from the state went to China.

Trade with Mexico

President Trump has also raged against Mexico. As America’s third largest trading partner, Mexico accounted for over 14.6% of the country’s total trade in February. The trade deficit for February with the southern neighbor stood at $5.7 billion, just about a fourth of the gap that U.S. has with China. (See also: How Much Does The U.S. Import From Mexico?)

Texas is the largest importer from and exporter to Mexico among U.S. states., With over $7.1 billion in exports and $6.4 billion in imports in February, the state ran a surplus with Mexico exceeding $692 million. Close to 40% of the state's outbound goods landed in Mexico while more than 35% of Texas's incoming goods came across its southern border.

 

Computer parts & equipment was the largest category of goods sent to Mexico by the Lone Star State, worth $1.78 billion in February alone, followed by nearly $998 million of coal and petroleum products.

The state of Michigan runs the largest deficit with Mexico, at $3.2 billion, owing to transportation equipment and automobiles. In February alone the state’s total imports stood at $4.2 billion of which over 62% were transportation related and more than half or $2.1 billion were motor vehicles. Mexico made up of more than 36% of all the imports into the state.

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