New Articles
  May 11th, 2018 | Written by

US Goods Deficit with China Expands on Stronger Imports

[shareaholic app="share_buttons" id="13106399"]


  • The US trade deficit in goods with China grew by 15.5 percent compared to the first quarter of 2017.
  • US imports of Chinese goods grew across the board in the first quarter of 2018.
  • US exports to China expanded in the first quarter, but at a slower pace—8.6 percent.

Despite the efforts of President Donald Trump and his administration to reduce the US trade deficit with China, the numbers are still moving in the opposite direction.

In the first quarter of 2018, the US deficit in goods grew by 15.5 percent compared to the first quarter of 2017, according to a report released by the US-China Economic Security and Review Commission, a United States government agency. This increase, according to the report is due primarily to a higher level of imports, which grew 13.6 percent over the same quarter in 2017. US imports of Chinese goods grew across the board.

US exports to China also expanded, but at a slower pace—8.6 percent. As reported by Reuters, in March 2018, growth in goods exports to China was primarily driven by “a surge of deliveries” of civilian aircraft, aircraft component parts, and soybeans, which dropped the monthly goods trade deficit to $25.9 billion. It has been reported that Chinese buyers are no longer taking delivery of US soybeans, in retaliation for trade measures imposed by Trump.

Four of the top five US imports from China grew by more than ten percent year-on-year in the first quarter of 2018, with computer and electronic products comprising over one-third of these imports. Over half of imported product categories saw growth over ten percent year-on-year, and imports of livestock and related products increased by more than 60 percent.

The first quarter of 2018 saw an 88 percent year-on-year increase in oil and gas exports to China. The US oil and gas export growth received a boost from a recent deal: in February 2018, Cheniere Energy signed a long-term supplier contract to export an annual 1.2 million tons of LNG to the China National Petroleum Corp. Some of that supply will ship this year. Oil and gas now account for about eight percent of China’s total imports from the United States, up from less than one percent in the first quarter of 2017.

The US trade deficit in advanced technological products (ATP) stood at about $33.4 billion in the first quarter of 2018, up 19.4 percent over the first quarter of 2017. ATP imports grew by 17.5 percent. Information and communication technologies (ICT) remained the greatest contributor to the deficit, with $36.1 billion in imports from China compared to $944 million exports from the United States.

In 2017, the US services surplus with China reached a record high of $38.5 billion, up from $38 billion in 2016. Exports to China hit $56 billion, a 3.5 percent increase year-on-year (the lowest growth rate in over 13 years). Services imports reached $17.6 billion, an 8.7 percent increase from 2016.

Exports of tourism, which includes Chinese students coming to the United States to study, dominate US services trade with China: in 2017, they reached $32.2 billion, or 57 percent of all U.S. services exports to China. For the third year in a row, however, exports of tourism have slackened. In 2017 they grew only 4.8 percent year-on-year, down from 23.2 percent year-on-year in 2014. US exports of financial services and intellectual property (IP) charges saw fairly significant year-on-year increases in 2017, growing 17.5 percent and 7.2 percent, respectively.

In 2017, as in previous years, US services imports from China were led by transport, which increased 5.3 percent from $4.4 billion in 2016 to $4.6 billion in 2017; travel (including for education), which increased 3.7 percent from $4.5 billion to $4.7 billion; and other business services, which increased 7.9 percent from $4.5 billion to $4.9 billion. Together, these three categories made up 81 percent of US services imports from China. Imports of insurance services leaped 726 percent from $50 million in 2016 to $413 million in 2017, going from a 0.3 percent share of US services imports from China in 2016 to 2.4 percent in 2017.