Trade War Widened US Trade Deficit, Increased Chinese Global Exports

Chennai: The US-China trade war initiated by President Donald Trump under his previous government failed to achieve its goals as the trade deficit of the US further widened while China’s global exports increased between 2017 and 2023. India too was a beneficiary of the trade war.

The US-China trade war, which began in March 2018 by imposing 25 per cent tariffs on steel and 10 per cent on aluminium, escalated to hundreds of Chinese goods. Between 2017 and 2023, US imports from China fell by $81.56 billion, reducing China’s share in US imports from 22.45 per cent to 14.39 per cent. Despite this decline, overall US merchandise imports grew by 31.51 per cent, increasing from $2.31 trillion to $3.04 trillion, finds GTRI.

Meanwhile, China’s global exports surged by $1.1 trillion, growing from $2.3 trillion to $3.4 trillion during 2017 and 2023, offsetting its losses in the US market. This could be possibly be due to the rerouting of goods through third countries and expanding Chinese production overseas.

Mexico’s exports to the US increased by $164.3 billion between 2017 and 2023. Canada followed with $124.0 billion, and Vietnam came third with $70.5 billion. South Korea and Germany too increased exports to the US.

India ranked sixth, with a $36.8 billion increase in exports from $50.5 billion to $87.3 billion. Key contributors to India’s export growth were smartphones and telecom equipment, which saw a $6.2 billion increase, accounting for 17.2 per cent of the total rise. Medicines contributed $4.5 billion, petroleum oils $2.5 billion, solar cells accounted for $1.9 billion and gold jewellery and lab-grown diamonds together added $2.3 billion.

“For India, this evolving trade landscape offers opportunities to strengthen domestic supply chains, reduce dependence on Chinese intermediates, and enhance competitiveness in key export sectors,” said Ajay Srivastava, founder of GTRI.