Americans bought fewer Chinese imports in 2023, but Chinese exporters aren’t necessarily hurting
Americans bought fewer Chinese imports in 2023, but Chinese exporters aren’t necessarily hurting
We learned this week that U.S. exports rose over the course of last year, compared to the year before, according to the Commerce Department. Meanwhile, imports fell — especially imports from China. Those were down more than 20% from the year before. And a lot of the trade China lost out on has been shifting to other countries.
One big reason trade with China was down last year is that people just aren’t buying as many of the kinds of goods that China’s known for making.
“Computers, cell phones, furniture, desks,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. “And so as consumers turn away from them, naturally, our imports of those goods from China will fall.”
Another reason is that it hasn’t exactly been easy to import from China over the last few years.
First, there was the trade war that started during the Trump administration. Then, supply chains got all congested during the pandemic.
Robert Johnson, a professor at the University of Notre Dame, said companies have been re-thinking whether trade with China is worth it.
“There’s been a movement, in general, towards moving production stages to countries that have more secure access to the U.S. market,” he said.
Those include Vietnam, Canada and Mexico.
Last year, the U.S. bought more goods from Mexico than China for the first time in more than 20 years.
Johnson said Mexico has been supplying a lot of auto parts and steel, but also products that China makes, including electronics.
“The rising importance of Mexico as a source of electronics for the U.S. leads me to believe that that’s a symptom of reorienting of consumer electronic supply chains,” he said.
That doesn’t necessarily mean that China is out of the picture. A recent paper by Harvard and Dartmouth economists found that Chinese companies have been investing more in Mexico and Vietnam.
Meagan Schoenberger, senior economist with KPMG, said that could be a way for those companies to indirectly send goods to the U.S. market.
“Maybe they’ll export somewhere else, it’ll get assembled in Mexico, or they’ll add a portion of it, and then it can be exported to the U.S., without carrying the cost of those tariffs,” she said.
Either way, Schoenberger said we shouldn’t expect the prices of those goods to come down quickly, even when they’re coming from countries with lower trade barriers.
That’s because moving supply chains around isn’t cheap.
“It’s not as if you can pick up your manufacturing plant, and move it somewhere else. That takes time, it costs investment,” she said.
And that, Schoenberger said, could put pressure on prices in the short-term.
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