Superman may be more powerful than a locomotive, but “Tariff Man” isn’t strong enough to derail the Chinese export machine.
That was the (by now familiar) message from trade data out of Beijing on Thursday.
Economists expected to hear shipments abroad rose by 5.3% last month. Instead, Xi’s number-crunchers said export growth clocked in at better than 7%, a meaningful acceleration from the prior month’s pace.
As the figure shows, shipments to the US were down sharply again versus the same month a year ago, but the point here is that it doesn’t matter: What China doesn’t ship to the US, they ship somewhere else. And in some cases, those somewhere elses ship the same stuff along to America.
Note that the rate of decline in exports to the US worsened in July from June. That makes the overall acceleration in the headline pace of export growth all the more notable, although you could probably nitpick this release for being the product of an easy comp — i.e., some of this is base effects.
A weaker yuan vis-à-vis some of Beijing’s trade partners probably helped too. The breakdown showed shipments to Asia and Europe rose 17% and 9%, respectively.
This comes with the usual caveat that the numbers may be picking up front-loading as buyers abroad attempt to get out ahead of whatever arrangement the US and China ultimately agree to in ongoing bilateral trade discussions.
The “transshipment” issue’s still front and center. It’s not clear whether, and to what extent, Trump’s tariffs will crimp that end-around. No one’s totally exempt from Trump’s levies this time, so re-routing won’t be the free lunch it was previously.
Notably, Chinese imports increased 4.4% in July. That was the most in a year and if it’s a proxy for domestic demand, it’s good news for an economy struggling to ward off unwanted disinflation.
But the overarching message from Thursday’s trade figures is that even if China ultimately succumbs to mild deflation, there’s scant evidence Trump will succeed in knee-capping overall growth.
For the year, China’s trade surplus will top $1 trillion, affording the Party more than enough plausible deniability to support otherwise tenuous claims about economic resiliency in the face of what the NBS aptly describes as a “complex and serious” external environment.
What that chart tells me is that at some point shelves will start to look emptier and prices for the things that are still on those shelves will be higher, even if the shelf is an app on your phone.
Meanwhile I noticed a story saying that Modi and Lula has a call today where they discussed ways of countering or adapting to Trump’s tariffs.
Another thing of note may be the purported leaks of Witkoff’s offers to Putin. If true, I’m not sure how much more Putin thinks he will get from DJT. But if accepted, you’d think that it would sure muddy up a bunch of popular trades here such as oil/LNG and European defense plays.
So much for the summer doldrums ….
I have some questions Mr. H. From what I’ve read, tariffs are paid at the port of the country that the goods are entering. If the importer doesn’t pay, the goods don’t leave the ship/dock. These rates change weekly, and they’re also unclear regarding what they apply to considering all the loopholes.
How are these tariffs getting enforced on the ground? Who is auditing the payments and how can we trust those numbers? Where do the payments go (do the claimed collections match the deposits)? Has the administration bolstered the infrastructure at US ports to distinguish between the different goods and the applicable loopholes/carveouts? How many containers actually get searched so that an itemized list can be made of the contents? For an administration habitually short on specifics and clarity, it seems to me this is fraught with logistical problems.
I’d go to the docks and ask the longshoreman where I live in NJ, but I’m not sure they’d appreciate my curiousity.
Further to your question, are the tariffs equally applied to all importers, or does say…Amazon’s imports are often overlooked, while Pop’s Hardware imports are always charged on time. Also, are tariffs handled exactly the same at each port? Has there been a shift in port of entry for goods since the tariffs have been in effect?
Rest assured the monies will be collected with DOGE efficiency and be fully accounted for down to the last penny. WHY? Because President Trump launched the External Revenue to carry this out as part of his long-term plan to eliminate the IRS.
So go back to your hammock and rest easy!
Longshoremen will be longshoremen and greased palms get work done whatever that work is.