As January sets record for lack of cool, China keeps it as Trump loses his
(Originally published Feb. 6 in “What in the World“) After rising in December to a record $122.1 billion, the U.S. deficit in manufactured goods climbed in 2024 to a record $1.2 trillion.
Though U.S. manufactured exports rose to a record $3.2 trillion, demand for foreign auto parts, computers, food, and drugs to lose the weight put on eating it offset U.S. exports of cars and machinery. The deficit was led by that with China—$295.4 billion. The overall deficit, which includes the kind of services in which the U.S. is more competitive, rose 17% to $918.4 billion, the highest since 2022’s record $944.8 billion.
While the deficit is in part due to a strong U.S. dollar (which has climbed roughly 3% over the past year) and a robust U.S. economy, the news will undoubtedly embolden U.S. President Donald Trump’s plans to impose tariffs on the largest U.S. trade partners.
Source: U.S. Bureau of Economic Analysis
China on Tuesday retaliated against Trump’s latest move to impose 10% in additional tariffs on its U.S. exports with targeted tariffs on about $20 billion of U.S. exports. China’s new tariffs affect only about 12% of its U.S. imports, well below the more than $450 billion worth of Chinese imports affected by U.S. tariffs. China imposed 15% tariffs on imports of U.S. oil and gas, which it doesn’t rely on.
The measured tariff response, analysts said, could suggest China is keeping its proverbial powder dry in case negotiations with Trump go south. It may also be using a more targeted strategy to responding to Trump’s trade war. In addition to its tariffs, however, China also further restricted exports of rare earth minerals upon which U.S. technology and defense companies rely. That may be part of carefully honed tactics Beijing has developed to counterattack against Trump’s blunt-force tariff attacks.
In an essay for The Wall Street Journal, Columbia University researcher Edward Fishman describes how China has carefully identified where in the global supply chain it can exert the most pressure on U.S. companies and the economy with specific sanctions and embargoes. One easy target is its export of vital minerals it dominates such as antimony, cobalt, gallium, germanium, graphite, and lithium.
Chinese export controls imposed during in response to tariffs and trade restrictions on technology exports imposed by former Pres. Joe Biden have already doubled the price of antimony.
Last month was the hottest January on record, and aside from global warming that made 2024 the hottest year on record, scientists are baffled as to why.