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China’s July Trade Data: Exports Boom despite Tariffs

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  • Today, China released its July trade data. Chinese exports rose despite President Trump’s tariffs.
  • The US will impose an additional 10% tariff on $300 billion worth of Chinese imports in September.
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China’s July trade data

Today, China released its July trade data. China’s dollar-denominated exports rose 3.3% YoY (year-over-year). Its imports, however, fell 5.6% in the period. China’s July trade data was better than expected. While its export growth exceeded expectations, its imports fell less than expected. Last month, China’s exports fell 1.3%, while its imports fell 7.3% YoY. In June, China’s export data was better than expected. However, its imports lagged analysts’ estimates.

Exports rise, imports fall

Despite the escalation in the US-China trade war, Chinese exports have fared well this year. However, Chinese imports have sagged amid a moderating domestic economy. Apart from April, Chinese imports have fallen on a yearly basis every month in 2019. Falling Chinese imports reflect a weak domestic demand environment. The Chinese economy expanded at an annual pace of 6.2% in the second quarter—its slowest rate of expansion since 1992. However, the Chinese economy is performing within the range that leadership has set for this year.

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China’s July trade data: Other takeaways

China runs a structural trade surplus with the US. The US is seeking to lower its trade deficit with China. It also wants China to address some other issues, such as state subsidies and intellectual property rights. However, after the recent escalation in the US-China trade war, the two countries seem far from a trade deal. CNBC reported, “China’s trade surplus with the U.S. was $27.97 billion in July, lower than the previous month’s $29.92 billion.” It added, “From January to July, China’s trade surplus with the U.S. has totaled $168.5 billion.” China has now stopped buying US agricultural products.

China’s slowdown isn’t a win for US companies

China’s July trade data shows a slowdown in Chinese imports. A slowing China isn’t a win for most US companies. Slowing car sales in China have hit US automotive companies such as Ford Motor Company (F) and General Motors (GM). China’s slowdown has also hit NVIDIA (NVDA) and Apple (AAPL). Chip makers Micron (MU) and Broadcom (AVGO) also get a significant portion of their revenues from China.

While President Trump sees the trade war as an easy win, Warren Buffett seems wary. The trade war took a toll on Berkshire Hathaway’s second-quarter earnings.

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