![]() China’s share of these four export categories has gone up significantly in the years following that country’s entry into the WTO. exports in these same goods starting from 1991. ![]() production of these goods?įigure 1 charts the top four merchandise-export categories as a share of global U.S. First, how have these exports evolved since 1991? Second, how important is China in terms of the global market for these exports? Third, how important are these exports in terms of aggregate U.S. We pose three questions vis-a-vis these exports. ![]() The third-highest export was motor vehicles, at $10.3 billion, and fourth was electronic integrated circuits, at around $5.29 billion. In 2017, the top export category to China was civilian aircraft, at around $16.26 billion, followed by soybeans, at around $12.25 billion. Therefore, our start date provides a useful benchmark to follow U.S.-China exports before its entry into the WTO and since that time. Last year is the most recent year for available data, while 1991 precedes China’s entry into the World Trade Organization (WTO) exactly by a decade. Next, we look at the top four merchandise-exporting sectors to China (in terms of 2017 exports in dollars) between 19. firms use in their global supply chains, which can also hurt U.S. In addition, higher tariffs will escalate the cost of Chinese intermediate inputs that U.S. The sectors that export the most to China, however, stand to suffer directly from the escalating Sino-American trade tensions. manufacturing sector, exports have boosted other sectors. While imports have led to job losses in the U.S. exporting firms need to make export goods, which renders U.S. Third, tariffs raise the prices of imported inputs that U.S. ![]() imposes tariffs on Chinese steel imports and China retaliates by imposing tariffs on U.S. International trade economists refer to this concept as the “Lerner Symmetry Theorem,” which says that an import tariff has effects that are equivalent to an export tax.Ī second, more direct channel is retaliatory tariffs imposed by foreign nations. In other words, import protection has the unfortunate effect of export reduction. In the long run, production in exporting industries must fall, and this, in turn, will reduce exports. There are several channels through which a nation’s import protection can affect its exports-we discuss three important ones next.įirst, as a nation devotes more resources to import-competing industries, it has fewer resources left to use in its export industries. Unfortunately, protecting industries that do not have comparative advantage (i.e., import-competing industries) is not costless for exporting industries. does not have a comparative advantage (e.g., iron and steel) benefit from greater trade barriers because of reduced foreign competition. On the other hand, sectors where the U.S. Producers of these goods seek markets abroad through the reduction of trade barriers. enjoys comparative advantage in products ranging from civilian aircraft to agricultural commodities like soybeans. International trade allows nations to specialize along the lines of comparative advantage. We conclude with a brief discussion of the status of the current U.S.-China trade war and its impact on U.S. exports, look at the top U.S.-China merchandise export categories and then identify the top producing states for these goods. In this article, we discuss how trade policy may affect overall U.S. exporters to China are facing the prospect of losing revenue, with the largest effects likely to be felt by states where production of these goods is concentrated. merchandise trade deficit-46 percent of the $800 billion deficit last year was with China alone-and the national impact of tariffs recently imposed by both countries. Debate on Sino-American trade relations has focused on China’s hefty share of the U.S.
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