US Trade Deficit with China Widens by $4.9 Billion in July asBusinesses Stock Up
BEIJING, Sept. 4, 2024 – The United States’ trade deficit with China surged by $4.9 billion in July, reaching $27.2 billion, accordingto data released by the U.S. Department of Commerce’s Bureau of Economic Analysis and Census Bureau. The widening deficit comes as American businesses rush to replenishtheir inventories ahead of potential labor disruptions at major U.S. ports.
The overall U.S. goods and services trade deficit expanded to $78.8 billion in July, marking the largest deficit since June 2022. This represents a 7.9% increase from the previous month and surpasses the estimated deficit of $79 billion.
The surge in imports, particularly from China, is attributed to businesses seeking to stock up before potential strikes byport workers on the East Coast and Gulf Coast. Labor unions representing these workers are currently in negotiations with port employers, demanding an 80% wage increase over six years. The unions have warned of a strike if an agreement is not reached by September 30, which could potentially disrupt operations at over 30U.S. ports and affect the work of approximately 45,000 workers.
The surge in imports, particularly from China, likely reflects U.S. businesses trying to get goods into the country before tariffs are imposed, said Carl Weinberg and Rubila Farooqi, economists at High FrequencyEconomics (HFE), in a report.
The increase in goods imported from China shows how difficult it will be to wean U.S. manufacturers off low-cost goods from China, despite the hopes of lawmakers and political candidates, said Christopher Rupkey, chief economist at FWDBONDS.
WhileU.S. exports increased by $1.3 billion in July, reaching $266.7 billion, imports rose by a larger margin, reaching $345.4 billion, an increase of $7.1 billion. The goods trade deficit expanded by $5.6 billion to $103.1 billion, while the services trade surplus declined by $0.2 billion to $24.3 billion.
The growing trade deficit with China has been a source of tension between the two countries for years. The Trump administration imposed tariffs on billions of dollars worth of Chinese goods in 2018, citing unfair trade practices. While the Biden administration has maintained some of these tariffs, it has also sought to engage with China on trade issues.
The latest data suggests that the trade deficit with China could continue to widen in the coming months, as businesses continue to stock up ahead of potential disruptions. This could further complicateU.S.-China trade relations and potentially lead to renewed calls for protectionist measures.
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