Is China circumventing US tariffs?

Wells Fargo Research Team Wells Fargo

Summary

We have written extensively about the deterioration in the trade relationship between the U.S. and China, and how tensions between the two nations have rewired global trade patterns. Following the implementation of Trump-era tariffs, the U.S.-China trade relationship reached an inflection point, and as of the end of 2023, China's trade surplus with the United States was essentially half of what it was relative to before the trade war. However, a deeper dive into global trade flows suggests the overall U.S.-China trade relationship may not necessarily be weakening as much as data suggest. Evidence exists that China may be circumventing U.S. tariffs via proxy nations, and still benefiting from U.S. demand and the United States as a final export destination. In this report, we highlight how the composition of U.S. import partners has changed over time. We also reveal how China's export destinations have also changed, and the same countries the U.S. is importing more from, China is exporting more to.

Coincidence? Probably not

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Author

Wells Fargo Research Team

Wells Fargo

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