China Trade Surplus with US Rises to Nearly $29 billion

China trade surplus hit a fresh monthly high in June, as exports to the US maintained strength just as trade tensions between the two countries further escalate.

Data released on Friday by China’s customs office showed that the country’s monthly trade surplus with the US reached a record high of $28.97 billion in June, compared to the surplus of $24.58 billion achieved in May.

Driving the country’s surplus was the steady pace of its exports to the US, which grew 13.6 percent during the first six months of the year, while imports from the world’s largest economy was up 11.8 percent in the same period.

Overall, both imports and exports with the US climbed in the first half of 2018, according to China.

US-China Trade Tensions May Pose Economic Risk on Both Sides

The figures came amid an intensifying trade dispute between the world’s two biggest economies and just a few days after the US threatened to levy 10 percent tariffs on an additional $200 billion worth of Chinese goods, which largely included consumer products.

In response to the tariffs, China warned to take retaliatory measures and pledged to file a complaint with the World Trade Organization (WTO).

US tariffs on $34 billion in Chinese items were put into action last week, with China also implementing 25 percent tariffs on the same amount in US goods on the same day the US tariffs were imposed.

Analysts expect to see the impact of tariffs in July’s data, with analyst Amy Zhuang stating that they forecast trade numbers for July to disappoint, since that is when the first round of US tariffs took effect.

Signs of exporters picking up the pace on shipments before the tariffs were carried out in the first week of July also suggested that the surge in the trade surplus was only a one-time outcome.

Still, Zhuang added that they do not anticipate a decline, as the tariffs only involved $34 billion worth of products, which is rather small compared to China’s total trade.

While China continues to improve from robust global demand for its goods for the time being, growing trade tensions with the US poses the risk of harming both countries.

US President Donald Trump, who has called for China to trim down the trade surplus, could use the latest data to add more pressure on the country, after both countries’ tit-for-tat tariffs last week.

However, if the US goes on with its plans to impose its new round of tariffs, Chinese exporters and American consumers may suffer the consequences, and with a huge number of basic consumers being targeted, US inflation is likely to pay the price as well.

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