The Mystery of the Missing Imports

Calculating the impact of the Trump Tariffs on China, the Tax Foundation used the authority of the International Emergency Economic Powers Act (IEEPA). They told us that the 10% tariff on all of China’s imports kicked in on February 4, with March 4 the date for a 10% increase. However, the de minimus exemption continued:

There is just one problem.

China Tariffs

Whereas a list of statistics always sound definitive, the New York Fed’s Liberty Street Economics found some contradictions. For starters, they concluded that imports from China declined less than U.S. official statistics indicate. Consequently, the newest tariffs could hit more products, especially if de minimus ends.

The big question is whose statistics do we use–the U.S or China? As you can see, the import dip between 2018 and 2024 was from 21.6% to 13.4% of total U.S. imports. However, at the same time, China’s numbers say that the exports they sent to the U.S. fell by 2.5%. Similarly, the U.S. reports a declining trade deficit while China says its trade surplus with the U.S. increased:

More precisely, comparing the U.S. with the rest of the world’s data shows a gob smacking $100 billion gap. Sort of like balancing a checkbook, we need to figure out why the numbers won’t gel:

Bottom Line: Solving the Mystery

One source of the discrepancy could be the exemption for small packages valued at less than $800. An incalculable massive number–for goods worth more than $50 billion–the de minmus tax eliminates levies on a vast proportion of packages from China. If President Trump erases the exemption, consumers could be hit by numbers we cannot figure out.

As a result, the mystery continues. But not knowing the numbers, we can be sure of unintended consequences.

And finally, xkcd had a new take on trade:

My sources and more: Always good for a contemporary issue, Liberty Street Economics explained discrepancies in the U.S. China trade statistics. Equally reputable, the Tax Foundation had the analysis.