Import Shuffle: Canada, Mexico Surpass China as the US' Biggest Trading Partner

-edited

For the first time in a decade, Canada and Mexico surpassed China as the US' largest trading partner.

Today's release of U.S. International Trade Data shows Canada and Mexico surpassed China but the biggest beneficiary is Vietnam.

The Wall Street Journal reports Tariff Fight Costs China Spot as Top U.S. Trading Partner.

U.S. imports from China fell 12% in the first six months of 2019 from a year earlier, while exports fell 19%, the Commerce Department said Friday in a monthly trade report. The total value of bilateral goods trade with China, $271.04 billion in the first half of the year, fell short of that with both Canada and Mexico for the first time since 2005. Mexico is now the U.S.’s top trading partner.

The decline in trade flows has hit U.S. farmers’ and multinationals’ earnings and sent importers scrambling to rearrange complex, global supply chains for electronics, machinery and commodities. It also highlights the widening impact of President Trump’s effort to negotiate better terms for U.S. companies in China and reduce America’s trade deficit.

Import Shuffle

Vietnam is the biggest beneficiary of in percentage terms, followed by the Netherlands, Belgium and Taiwan.

Winning Not

Despite the decrease in trade with China, Trump has not put a dent in the trade deficit.

Recession May "Help"

In a perverse way, Trump may manage to reduce the trade imbalance. His tariffs are certainly recessionary and note what happens to trade in recession in the above chart.

A Global Manufacturing Recession Started and Trump's China Tariffs Made Matters Worse.

And please note the average lead time between manufacturing recessions is less than a full quarter.

For discussion, please see Manufacturing Recessions vs Real Recessions: How Much Lead Time Do You Expect?

Mike "Mish" Shedlock

Comments (20)
No. 1-13
Greggg
Greggg

I wonder if Canada and Mexico are selling us reboxed Chinese goods?

HubbaBuba2
HubbaBuba2

The odds the Hong Kong Umbrella (for tear gas defense, etc) Protestors have shifted to "Made in America" umbrellas??

I wonder if any company in the US makes umbrellas?!

IMHO I would be cautious with the HK situation becoming a "Black Swan" event with China. Neither side is backing down.

Casual_Observer
Casual_Observer

I posted awhile back that Trump has luck in 2 negatives multiplying to be a positive or net nothing. The post by Mish describes exactly what I meant.

thimk
thimk

well it looks like are our import driven economy is being serviced by other , non china suppliers. zero sum game . As a anecdotal side note I have been picking up EU food stuffs in dollar tree , good quality. Also stuff from india, and south america. Read the labels . This all about reducing china's global influence. But we still need to produce here in the states . A service driven economy based on debt and asset inflation is not prudent . welcome to my ted talk.

purelogic
purelogic

How is it that the Chinese Communist Party isn't considered the moral equivalent of the Nazi regime? They torture people and kill people to harvest their organs. Why isn't everyone demanding a minimum of 50% tariffs on Chinese goods? Look, people used to give me a hard time for praising Hitler and the Nazis. Now I don't need to praise them anymore because it's obvious they were not that bad after all.

mrutkaus
mrutkaus

Can this be more a move to reduce China as a threat and as a world power, trade consequences be damned?

ZZR600
ZZR600

I wonder what % of Vietnamese exports are from Chinese-owned companies? Is it possible that some goods from the Netherlands are Chinese goods that have been diverted?

numike
numike

Trump is anti-American in spirit. His heart is.over in Asia and has been since the mid-90s

abend237-04
abend237-04

I suspect Mish is out of range and I've learned not to debate with anyone about Hitler and his nazis.

Tony Bennett
Tony Bennett

Sure, tariffs are throwing some sand in the gears.

But you are ignoring King Dollar. $US has been strengthening the past couple of years. Hurting US exports. Strengthening in large measure by Federal Reserve raising rates and shrinking balance sheet while other central banks continued to ease. China's loose peg to $US is hurting them as much as any tariff. Mercantile economies manipulating their currency (lower) is a back door tariff (for their trading partner).

HossCatDaddy
HossCatDaddy

It doesn't matter what trump does people like mish will never give him any credit period why trust what mish says

HossCatDaddy
HossCatDaddy

the point of tariffs is to make their products more expensive for us so we'll shop elsewhere that's the point to put China outta business or play fair and besides it's all funny money all these blogs are for is to make a paycheck for the likes of mish

Advancingtime
Advancingtime

Follow the money from the United States huge trade deficit with Mexico becomes more disturbing as you begin to understand where the money eventually ends up. When you start thinking about all the money and jobs we shift into Mexico each year you would think by now Mexico would be rolling in cash.

A bit of research quickly confirms that the money Mexico receives by way of trading with America quickly passes through its lands and flows to Asia. It could be argued that when all is said and done we are still transferring our wealth to the far east only by the scenic route. More on the problem with this in the article below.