US-China Trade War Heats Up: How Large is America's Trade Deficit with China?

The trade war between the United States (US) and China is intensifying. Both countries are retaliating by raising import tariffs on each other's goods. Starting September 24, 2018, the US government again raised tariffs on goods worth over US$200 billion. This tariff increase is 10% and will rise to 25% starting early next year.

The American government's policy was met with a retaliatory plan from the Chinese government to raise tariffs on US$60 billion worth of US goods imported into China. President Donald Trump's move to raise tariffs on imported goods from China has not yet managed to reduce the American trade deficit.

According to the US Bureau of Statistics, the US trade deficit for the January-July 2018 period increased by 8.73% to US$222.56 billion compared to the same period the previous year. Similarly, the trade deficit for January-July 2017 rose by 7.07% from the previous year. The value of American goods imported from China in the January-July period this year increased by 8.55% to US$296.84 billion, while the value of American goods exported to China only grew by 8% to US$74.28 billion. As a result, the US trade deficit actually increased despite the tariff hikes on goods from China.