US Import/Export

On December 14, 2011 CNNMoney reported that the Commerce Ministry of China announced increased duties on US made sedans and SUVs, raising the cost of those vehicles to Chinese buyers by between 2% and 21.5%; the new tariffs will last for 2 years. CNN said the action could imperil billions in sales by Detroit automakers. Experts in the field said they don't expect the import duties and lost sales to be a significant blow to the US automakers since most of their sales there won't be affected; it's likely a move by the Chinese to try to block the US from filing any additional sanctions against its own exports here. "They're basically saying if the US tries to put tariffs on imported goods from China, they'll retaliate," said Rebecca Lindland, director of research at IHS Automotive. The US Trade Representative's office (the advocate in trade disputes) said it was "very disappointed in this action by China today" and would consult with Congress and US automakers about how best to respond.

On May 15 we heard that in the past 10 years (China entered the World Trade Organization in 2001) American exports to China increased 542%. I found this came from The Hill’s On the Money Report of March 27 that said - total US exports to China rose 542 percent to $103.9 billion in 2011 from $16.2 billion in 2000 making the communist nation the third-largest US export market). The On the Money report also said exports rose $102 billion to Canada, $86 billion to Mexico, $28 billion to Brazil and despite the substantial increase in exports, the US share of imports into China has fallen to 7% from 10% in 2000 making the United States only the fifth-largest source of Chinese imports last year. The report suggested that as part of President Obama’s plan to double exports by 2014 he should try to reclaim the 10 percent share of China’s imports. The US-China Business Council (USCBC – a group of about 220 American companies doing business with China; they’re charged with analyzing the business climate for companies who are doing or wish to do business in China) suggested that policymakers can bolster US trade to China by expanding capacity and resources for the foreign commercial service which helps small and medium exporters find more export opportunities. The USCBC is urging reauthorization of the Export-Import Bank (Congress so far has rejected proposals to provide funding for the bank) and call on the funding of the US Trade Representative's office so it can continue helping exporters understand and remove market access barriers. Okay, I’ll go with funding the US Trade Representative office but not the bank; let businesses get their money from the TV show Shark Tank investors or someone other than the government.

On May 25, 2012 Donald Trump was on the View. He said he likes what Romney is saying about OPEC and China ripping us off; Columbia $4 billion, China $350 billion and we have to do something about it. First, I think these guys should read my Oil 101 blog of May 23 to find out we get the majority of our oil from Canada, not OPEC. Now, let’s look at this rip off. In 2011 the US exported $129 billion in goods and services to China while it imported $411 billion from China; leaving a $282 billion deficit for the US. The largest imports from China are: electrical machinery ($98.7 billion), machinery ($94.9 billion), toys and sports equipment ($22.6 billion), furniture and bedding ($20.5 billion) and footwear ($16.7 billion). We also imported $4 billion in agricultural products such as fruit, vegetables, juices, snack food, and spices. (Our top exports to China are: transportation equipment/machinery ($12.2 billion), agricultural products such as soybeans, cotton, hides and skins, and coarse grains ($18.9 billion), electrical machinery ($10.1 billion), vehicles ($6.8 billion) and aircraft ($6.4). The latest data available for investments were for 2010. This data showed US investments were led by the manufacturing and banking sectors to the tune of $60.5 billion (up 21.4% over 2009) and China’s investment in US stock was $3.2 billion (up 171.6% from 2009) and led by the wholesale trade sector. What this means is that the US companies gave (they didn’t take) more business to China than to the US people.

The trade figures for January – March 2012 show that the US exported $27 billion to China while it imported $94 billion – a $67 billion deficit. We heard on February 22 that Neutex brought its LED light bulb business back from China to Houston, Texas and GalaxE (an IT firm that connects patient’s medical records) is going to Detroit, Michigan from India. But as long as businesses such as Apple (May 3 – Indifference our Downfall blog), Nike, WalMart and others choose to invest in the Chinese worker over the American worker, nothing will change. Romney and Trump can tout a change but since they support big business I doubt that they’ll do anything that will redirect work back to the US. And don’t forget about the infrastructure projects in Alaska, California and New York that went to Chinese workers to the tune of $7.8 billion (October 8 blog – Going Without).   

On May 25 we were told that the US and world economies are slowing down; in the US, businesses are cutting back on machines and computers; China reported a drop for the 11^th month in a row and Europe’s economy has hit the biggest low in 3 years. While American businesses slow down their spending on US products and workers the US House is planning a summer session to extend the Bush-era tax cuts to the rich. Yes, on March 30 Exxon Mobile lost its title to a Chinese company as the world’s largest oil trading company but it’s still a multi-billion dollar business. We’ve been doing things the rich man’s way; they got us into this mess – please stop listening.