What Do We Trade With China?

With the headlines telling us that a 145% tariff on China could now come down, we can ask, “On what?”

Today, let’s take a closer look at the U.S. China trade relationship.

U.S. China Trade: Goods

We import almost three times as much from China as they buy from us:

Specifying what the deficit refers to, the following graph displays electronics and machinery as top imports from China:

At the same time, our top exports to China include the soybeans, wheat, and corn that are classified at oil seeds and grains:

U.S. China Trade: Services

Although these services statistics are from 2021, still, we can get an idea of how China’s merchandise trade surplus is offset by U.S. services exports:

U.S. China Trade: States

CBS News tells us that Texas was the country’s largest exporter to China in 2023.  Meanwhile, below, we can see that, as we move to the East, trade with China diminishes:

Our Bottom Line: Comparative Advantage

According to 19th century economic thinker David Ricardo, trade is optimally productive when the participants produce whatever requires the least sacrifice. That took me to CNN’s Erin Burnett. While her purpose was to explain the impact of the trade war, for us now, let’s just see one example of what China produces. Made for a toy seller in the United States, one of the stuffed animals is called a framel (frog and camel combo):

Because of what China would otherwise be producing with its land, labor, and capital, it makes sense for them to make framels. By contrast, were they manufactured in the United States, we would have had to transfer our factors of production from a good or service that was more valuable.

As for the U.S.’s comparative advantage, we can see it through the services we export to China.

So, where are we? The U.S. China trade relationship identifies what the weapons in a trade war are targeting.

My sources and more: Thanks to Sherwood for inspiring today’s post on the U.S. China trade relationship. While I’ve used Sherwood for some of our data, other sources did not entirely agree. This is what CBS News told us, WSJ, and the U.S. China Business Council. Then, for more trade, econlife also looked at Mexico and Canada.