China trade surplus with USA hits historic high & timing couldn’t be worse

China is hitting the US where it hurts soybeans

China is hitting the US where it hurts soybeans

The trade surplus was 261.88 billion yuan last month, official data showed.

Donald Trump had recently upped the ante by threatening higher tariffs on a colossal $200 billion of Chinese imports.

China's June trade grew by double digits amid mounting tensions with Washington but Beijing warned its exporters to face "rising instabilities and uncertainties".

The US economy is far less reliant on trade than most other major countries, but there will be an impact from the higher costs of imports.

Firing the first shots in a trade war that has rattled financial markets and raised risks to the global economy, Washington last week imposed 25 percent tariffs on $34 billion of Chinese imports, drawing rapid retaliatory duties by Beijing on the same amount of U.S. exports to China.

This week, Washington threatened to impose 10% tariffs on another $200bn of Chinese imports.

"Looking ahead, export growth will cool in the coming months as United States tariffs start to bite alongside a broader softening in global demand", Julian Evans-Pritchard, the senior China economist at Capital Economics in Singapore, said.


But comments from China's commerce ministry indicated that June's figures are a blip, a result of Chinese companies pushing to get products out the door before the tariffs went into effect, according to Reuters. So far, encouraged by strong job growth and expectations of good quarterly earnings reports, United States markets have been strong and the Australian market has reached a 10-year record high. "They are just a trade bully", he told reporters in Geneva.

Investors fear a prolonged trade battle with the United States could harm business confidence and investment, disrupting global supply chains and harming growth in China and the rest of the world.

China's total exports rose 11.3% year-on-year in June, beating a Bloomberg News forecast of 9.5%.

Growth in imports for June showed a moderate slowdown from May, official data showed on Friday.

But, he said, China has another option - Beijing could reduce the impact of United States tariffs on exporters by devaluing the yuan to make its goods cheaper for American consumers.

The commerce ministry also said this week it will use funds collected from tariffs charged on imports from the U.S. to help ease the impact of USA trade actions on Chinese companies and their employees.

The June figures may have received a boost from United States and Chinese traders who rushed to fill orders for soybeans, ball bearings and other goods in both directions before threatened tariff hikes took effect.

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