China's Exports Surge as Factories Resume Rush to Beat New Tariffs

The total value of goods exchanged between the U.S. and China rose in September 2024. The U.S. Census Bureau reports the combined value of goods either imported or exported between the two nations totaled $54.3 billion, which is both up from $51.8 billion in August 2024 and up from $52.1 billion in September 2023.

Much of the increased was paced by China’s exports to the United States, which grew by 8% over August 2024′s level while U.S. exports to China dropped by nearly 6%. That’s somewhat remarkable since many of the Biden-Harris administration’s new and expanded tariffs on a range of goods went into effect in August 2024.

But that may only be the beginning of a new, short-term surge in exports. China’s exporters facing new and expanded tariffs in 2025 have a strong incentive to accelerate shipments of their products to the U.S. once again. Early export data for October 2024 points to that motivating factor as Chinese companies once again seek to “beat the clock” on new tariffs:

China’s exports grew at the fastest pace in over two years in October as factories rushed inventory to major markets in anticipation of further tariffs from the U.S. and the European Union, as the threat of a two-front trade war loomed large.

Donald Trump’s sweeping victory in the U.S. presidential election has brought into sharp focus his campaign pledge to impose tariffs on Chinese imports in excess of 60% and is likely to spur a shift in stocks to warehouses in China’s No.1 export market.

That’s a remarkable development for a different reason. If the threat of new tariffs that might be imposed by the incoming Trump administration carried enough weight for China’s factories to justify spending millions to shift into overdrive to ship as many goods as they can before they might take effect in 2025, China’s decision makers had to have concluded that Donald Trump was likely to win election many weeks earlier. In effect, they would have to have been betting real money on that outcome as early as August 2024, months ahead of the U.S. elections on 5 November 2024, in order for it to affect Chinese export data in October 2024.

Going back to the U.S. side of the international trade ledger, the following chart shows the evolution of trade between the U.S. and China from January 2017 through September 2024.

The trailing twelve month average of the total value of goods exchanged between the two countries increased in September 2024 for the fourth consecutive month since it bottomed in May 2024.

Meanwhile, the gap between that trajectory and a counterfactual projection of what the level of trade would be in the absence of the Biden administration’s anti-free trade actions declined to $17 billion in September 2024. The cumulative loss in trade in the two years since October 2022 because of the Biden-Harris administration’s tariffs now totals $275.8 billion.

Image Credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Chinese businessman ordering his crew to ship as many products to the U.S. as they can before new tariffs go into effect”.