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The year-over-year growth rate in the exchange rate-adjusted value of goods and services exported by the United States to China crashed in January 2018, which prompted President Trump to tweet, as many things do, the following comment on Twitter:
Here's the update to our chart tracking the year-over-year growth rate of trade between the U.S. and China showing the plunge:
We dug deeper into the U.S. Census Bureau's trade data for U.S. exports to China in January 2018, where we found the culprit responsible for crashing the year over year growth rate of U.S. exports to China: soybeans.
Compared to January 2017, when the U.S. sent over $1.937 billion of soybeans to China, in January 2018, the U.S. sent just a little over $1.244 billion, where that $693 million year over year decline more than accounts for the overall topline $237 million decline in U.S. exports to China in the year over year numbers. For reference, in January 2017, the U.S. exported some $10.072 billion worth of goods and services to China, while in January 2018, the U.S. exported a total of $9.835 billion.
Since we've already covered the story of what's really behind the reduction of U.S. soybean exports to to China following the 2017 harvest, we'll observe that one way that U.S. soybean producers can boost their numbers is to focus on improving the quality of their product and shipments.
But if President Trump really wants to reduce the trade deficit with China, a good place to begin would be to expand the range of goods and services that U.S. businesses export to China in larger numbers than they do today. Crude oil exports have been a good place to start, and without them, January 2018 would have been disastrous. Perhaps U.S. businesses with medical and surgical technologies to sell would be a promising area for expanding the breadth of U.S. exports to China. Or optical fibers. Or any one of several other U.S. product categories that proved to be unexpectedly popular with Chinese importers in January 2018. Instead....
In the both the ideal and in the real world, the correct goal is to expand the total volume of goods and services expanded between the two nations, where what the U.S. really benefits from a rising trend in the black line shown in the following chart.
How hard can it be? Or perhaps the better question to ask is: "How hard does it need to be?"