Trade deficit in US.docx - The Balance...

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The BalanceUS Trade Deficit With China and Why It's SoHigh© The Balance 2020BYKIMBERLY AMADEOUpdated February 26, 2020The U.S. trade deficitwith Chinain 2019 was $345.6 billion.1That's 18% less than 2018's $419.5 billion deficit. The trade deficit exists because U.S.exportsto China were only $106.6 billion while imports from China were $452.2 billion.1The biggest categories of U.S. imports from China were computers, cell phones, apparel, and toys and sporting goods.2A lot of these imports are from U.S. manufacturers that send raw materials to China for low-cost assembly. Once shippedback to the United States, they are considered imports. China's biggest imports from the United States are commercial aircraft, soybeans, and semiconductors.3In 2018, China canceled its soybean imports after U.S. President Donald Trumpstarted a trade war. He imposed tariffson Chinese steel exports and other goods. By 2019, soybean imports had doubled to $8 billion, still less than the $12 billion imported before the trade war.45Key TakeawaysIn an effort to manage the large U.S. trade deficit with China,President Donald Trump began imposing import tariffs on Chinese imports in 2018.Low-priced consumer goods produced in China has been dominating American importation over the years.
China can manufacture many goods at competitive prices because of two comparative advantages: lower standards of living and a partial pegging of the yuan to the dollar. To keep export prices low, China buys a large volume of Treasurys. It has become one of the largest lender nations tothe United States, currently second only to Japan.

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