President Donald Trump announced today that the United States will apply a 25% tariff to about $50 billion worth of Chinese goods. They will be applied in two waves. First, to over 800 products worth $34 billion on July 6, followed by 284 goods worth an additional $16 billion, the date for which has not been set.

The June 15 announcement comes as a part of President Trump's 'America First' effort that have escalated U.S. - China trade tensions. Trump's decision to impose steep tariffs on imported steel and aluminum earlier in March did not go down well with United States' biggest trading partner - China. The Asian economy fired back with its own trade barriers on April 1, increasing tariffs to up to 25% or nearly $3 billion on 128 U.S. goods it imports. The United States immediately responded with its own 25% tariff on 1,300 Chinese goods such as medical devices and batteries. Under a plan announced on April 4, China responded by threatening new tariffs on 106 American products. As the possibility of a trade war escalates, spooking markets across the globe, here's how the trade numbers stack up.

U.S. – China Trade

In 2017, China was America’s largest trade partner ahead of Canada, accounting for 16.4% of the total trade. U.S. imports from China exceed exports by nearly $375 billion, while that figure was $161 billion for the first four months of this year.

Based on origin and destination of the goods data, California accounts for nearly 38% of 2017 deficit even though it was the second largest exporter among all states to China with exports worth $16 billion.

 

The largest component of the California-China trade is 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 $6.6 billion (nearly 4.6% of California’s deficit) in 2017. The biggest driver for this is the state’s exports of oilseeds (e.g. soybean and cotton) and grains.

Tough Talk on Trade

President Trump has repeatedly talked tough on China, accusing the Asian economic powerhouse of manipulating its currency.

"Trade between our nations has been very unfair, for a very long time. This situation is no longer sustainable. China has, for example, long been engaging in several unfair practices related to the acquisition of American intellectual property and technology," Trump said in a White House Statement on June 15. "In light of China’s theft of intellectual property and technology and its other unfair trade practices, the United States will implement a 25 percent tariff on $50 billion of goods from China that contain industrially significant technologies."

The economy was the major focus of Trump during the presidential election and many consider voter anxiety over jobs as one of the reasons Trump won the race. While Trump denounced 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.

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