US-China Trade Decline May Have Hit A Bottom

The total value of goods exchanged between the United States and China rose for the first month since October 2022.

That month marked the beginning of a serious deterioration of trade between the two countries following President Biden's action to restrict the export of advanced semiconductor technology from the U.S. to China. The fallout from President Biden's anti-free trade policies has been worse than the losses that occurred during former President Trump's 2018 tariff war with China prior to the coronavirus pandemic's negative effect on trade.

We measure that loss in trade with the trailing twelve month average of the combined value of goods traded between the two countries. In February 2024, the value of that trade ticked up to $47.8 billion from the $47.6 billion recorded in January 2024. The following chart has been updated to show this value for each month from January 2017 through February 2024.

For February 2024, the gap between the trailing year average of US-China trade and its post-pandemic recovery counterfactual held at $15.4 billion, making this month the first since October 2022 in which the gap has not grown.

Unfortunately, President Biden's anti-free trade policies that harm American consumers extend beyond its trade with China. The United States' trade with the rest of the world has likewise declined following President Biden's 2023 State of the Union address, in which he announced expanded "Buy American" anti-free trade measures. That action has greatly diminished trade between the U.S. and its other trading partners, not just China. The next chart shows the gap between the U.S. trade between the rest of the world and its pre-State of the Union counterfactual trendline has widened again in February 2024, even though that trailing twelve month average appears to have hit a bottom in January 2024.

Going back to the trade situation with China, the improvement in US-China trade recorded in February 2024 may be short lived. The Biden administration signaled the expansion of its anti-free trade policies with new restrictions targeting China's exports of so-called green technology products, such as electric vehicles, lithium-ion batteries, and solar energy technologies.

In many ways, Biden's trade policies are becoming a larger rehash of the crony socialism that characterized to the Obama administration's green energy failures. That's why on the cusp of hitting a bottom on its China trade policy, the Biden administration may soon resume digging its hole deeper.