On July 10, 2018, the Trump Administration announced the preparation of a 10% tariff on Chinese goods, worth about $200 billion, in the third round of tariffs on Chinese goods this year. These consumer goods include fruits and vegetables, handbags, minerals, kitchen appliances, and clothing. According to a White House official who spoke to CNBC, the reason for adding the $200 billion figure was because it was "roughly equal to their exports to us". As of May 2018, the U.S. imported nearly $205.1 billion worth of Chinese goods.
These recent events come as a part of President Trump's 'America First' effort that has escalated U.S. - China trade tensions. Trump's initial 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.
On July 6, the United States applied a 25% tariff to over 800 products worth $34 billion. Chinese products targeted by the U.S. tariffs include vaping devices, medical devices, and batteries. The tariff on July 6 was immediately met with a $34 billion tariff from China on American goods such as pork, steel, and cars.
As trade relations between both countries get strained, states that rely heavily on trade with China could get impacted in a big way. 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 exceeded exports by nearly $375 billion.
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. (See also: 10 Major Companies Tied to the Apple Supply Chain.)
Louisiana 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% tariff on $50 billion of goods from China that contain industrially significant technologies."
The Trump administration continues to reinforce this stance with this new round of tariffs.
“For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition. We have been very clear and detailed regarding the specific changes China should undertake," said U.S. Trade Representative Robert Lighthizer, in a USTR statement from July 10. "Unfortunately, China has not changed its behavior – behavior that puts the future of the U.S. economy at risk. Rather than address our legitimate concerns, China has begun to retaliate against U.S. products."
The economy was the major focus of Trump during the 2016 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.