Trade relations between America and China are plummeting quickly as America purchases fewer and fewer goods from the second largest economy in the world.
The downturn in the flow of goods from Chinese producers to American companies has been attributed to their ongoing soft conflict on technology and trade.
American businesses have realized that this conflict is “not going away” and that they must “try to figure out ways to de-risk” according to Chad Bown, a senior fellow at the Peterson Institute for International Economics and a researcher on the matter.
Beth Hughes, of the American Apparel and Footwear Association, which represents American companies, told Politico in early August that while there are many elements to the story, American companies are definitely moving away from Chinese imports: “They hear the message from Congress and the administration.”
Lead economist of Oxford Economics in London Adam Slater summarized, “The behavior of the governments toward each other—the more hostile, confrontational stance—is starting to affect private-sector decision-making because it changes the risk profile,” according to The Washington Post.
The Wall Street Journal assembled a series of charts to spell out the decline in trade between the U.S. in China, using data from the Census Bureau. In the first six months of 2023, China represented 13.3% of America’s goods imports compared to 21.6% in 2017, when it peaked. The current share is the second lowest of the 21st century since 2003, when it hit 12.% two years after China joined the World Trade Organization (WTO).
China’s percentage of total trade with the U.S. declined from a peak of 16.3% in 2017 to 10.9% in 2023, the lowest since roughly 2005 as American importing of Chinese goods declined across the board of categories, from electronics to plastics to clothing.
Wall Street Journal found that smartphone imports to the U.S., which China had a near-monopoly on, declined from over 84.6% in Sept. 2021 to 75.7% in June 2023. The U.S. is relying less and less on China for the importation of semiconductors, from 12.4% in Aug. 2018 to to 5.1% in June 2023. Notably, the Biden administration banned American investment in Chinese advanced semiconductors and quantum computing development this week.
Companies that have recently cut ties with China include Apple, which is moving its iPhone production to China, and toy manufacturer Mattel which moved more of its production to Mexico.
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