Recent data is showing that the fallout from the trade war with China is hurting the United States as well. Chinese imports of American goods fell 31 percent in June on a year-over-year basis. Chinese exports to the U.S. dropped nearly 8 percent, while China’s trade surplus grew 3 percent to about $39 billion.
China has been shifting its buying to other countries, leaving export-dependent sectors of the American economy at a loss. American farmers have seen their incomes slide, despite a federal aid program intended to help them through the tough times. The Chinese economy, which was already decelerating, is continuing to slow its rate of growth, reducing demand for foreign goods. According to economists, China’s GDP growth rate will fall to 6.2 percent for the second quarter from 6.4 percent in the first quarter.
The data does not bode well for the future of U.S.-China trade negotiations. As long as the negotiations are stalled, the damage to the global economy will continue. Federal Reserve Chairman Jerome Powell and other Fed officials have expressed concern about the situation and are watching closely.
The American Chamber of Commerce in China said in a recent survey that nearly 41 percent of American companies are considering moving factories from China because of the trade war. However, most of those companies are not planning on moving their manufacturing to the U.S. According to the survey, less than 6 percent plan on making their products in the U.S. instead.
This is in large part due to the decline in manufacturing in America over the past few decades. At a hearing late last month, a number of companies testified that while there is an entire supply chain in China to support their production, there is no equivalent network in the U.S. Companies are largely eyeing Southeast Asia and Mexico. Many products from Cambodia, India, Indonesia and Thailand can be shipped to the U.S. duty-free because of U.S. laws designed to help developing countries grow their economies.