US-China Trade in Goods Set Record in 2022 (2024)

US-China trade in goods hit a new record in 2022, despite increasingly tense bilateral relations. The positive trade data indicates that there is still high demand from both businesses and consumers for mutual cooperation and trade in both countries, and calls into question the viability of “decoupling”. We break down the latest trade data and discuss the implications for the future of US-China relations and trade.

US-China trade in goods hit a new record in 2022, according to data published by the US Bureau of Economic Analysis (BEA) last week. Total imports and exports grew 2.5 percent year-on-year to reach US$690.6 billion, breaking the previous record of US$658.8 billion set in 2018.

The US trade deficit with China also expanded by 8.3 percent year-on-year to reach US$382.9 billion in 2022. The latest figures indicate that demand from consumers and businesses remains high despite worsening trade relations between the two countries, and calls into question the viability of economic “decoupling”.

US-China trade in goods in 2022

According to the BEA data, US imports of goods from China grew by 6.3 percent year-on-year to reach US$536.8 billion. This is just below the high of US$538.5 billion set in 2018. Meanwhile, exports to China broke records, growing by 1.5 percent year-on-year to reach US$153.8 billion.

China was the US’ third-largest trading partner in 2022 overall, after Canada and Mexico. However, China remained the US’ largest source of imports.

Meanwhile, according to statistics from China Customs, the US was China’s third-largest trading partner after ASEAN and the EU but remained its largest single-country trading partner.

Data from the US Census Bureau, computers and electronics remained the US’ largest import commodity in 2022, with the customs import value reaching US$161 billion, a slight decrease of 0.4 percent year-on-year.

Meanwhile, the US’ main exports to China were agricultural products, which grew 19.7 percent year-on-year to reach US$30.1 billion in value. Of these, the export of soybeans alone accounted for almost 60 percent.

Both the US and China exported and imported a significant amount of chemicals to one another, with the US being in a deficit of US$9.2 billion.

Bilateral trade in the wake of tariffs and two-phase deal

The robust bilateral trade figures provide further evidence that the Chinese and US economies remain highly reliant upon each other, despite the souring diplomatic relations and rising protectionism.

The US and China have been embroiled in a trade war since 2018 when then-president Donald Trump imposed tariffs on around US$300 billion worth of Chinese goods. In retaliation, China imposed tariffs on around US$100 billion of goods, focusing mainly on agricultural and seafood products.

Since taking office in 2021, President Joe Biden has kept the tariffs in place, although both China and the US have recently extended tariff exclusions that were due to expire late last year.

In May 2022, the US Trade Representative (USTR) signaled it may lift the tariffs on some Chinese goods in aneffort to battle high inflation as a portion of the tariffs were due a review as they reached their four-year expiration date. This four-year review is being conducted in two stages, the first starting in September 2022 and the second starting in November 2022. No conclusion for the review has been issued yet, although US businesses have since called on the president to lift the tariffs.

In an effort to restore trade relations, in 2020, the US and China signed phase one of a two-phase trade deal, in which both countries pledged to increase imports from one another. Under the deal, China pledged to increase the imports of US goods by at least US$200 billion over a period of two years (up until 2021), including manufacturing, agricultural, and energy goods.

However, by the end of 2021, most of the trade commitments had not been met. The import of US agricultural products to China, for instance, had fallen short of the US$80 billion that had been agreed upon in the deal.

Meanwhile, negotiations on phase two of the trade deal have sputtered amid worsening US-China relations over the past few years and some doubt whether there is sufficient will in either Washington or Beijing to push forward with the deal.

However, as seen in the table above, agricultural exports to China actually increased once again in 2022. The total value of US soybean exports to China barely grew in 2021, increasing by just 0.4 percent year-on-year to US$14.1 billion in 2020. In 2022, this jumped by 26.6 percent to US$17.9 billion. This has partly been attributed to the fact that Brazil, one of China’s main sources of soybeans, experienced a severe drought in 2022.

The future of US-China trade in goods

In addition to the trade tariffs, the US has been intensifying sanctions on the Chinese technology sector, most recently by implementing export controls on advanced computing and semiconductors to China in October 2022. In January of this year, China released draft rules that would restrict the export of key solar manufacturing technology, an industry in which China is hugely dominant.

These are a few examples of how China and the US are attempting to shore up their own competitiveness in strategic industries while hindering each other’s development. Both countries are also making concerted efforts to decrease reliance upon one another, through diversification of supply chains for key materials and so-called “friend-shoring”, where a country encourages industries to move production to a “friendly” country.

Notably, China is making a concerted effort to increase self-sufficiency in soybean cultivation so as to reduce reliance on imports. The “14th Five-Year” National Planting Industry Development Plan released in early 2022 committed to increasing domestic production of soybeans to 23 million tons annually by 2025 (in 2022, output reached a new record of 20.3 billion tons). To improve yield and achieve these targets, China is also paving the way to approve genetically-modified soybean and corn crops. These efforts could in the long run serve to decrease US grain exports to China.

Other factors beyond direct policy action may also impact overall trade between the two countries, such as decreasing demand for Chinese goods following the surge in demand during the COVID-19 pandemic, the slow recovery of domestic consumption in China, continued global supply chain disruption, and increasing competition from other economies.

With both countries moving increasingly toward higher self-reliance, it is possible we will see a decrease in bilateral trade in certain sectors over the coming years. However, the latest trade figures make it clear that the two countries remain highly reliant on one another for certain goods. For instance, the US is still highly reliant on China for light manufacturing, and this sector remains an important source of income that China will not want to lose.

In addition, efforts by US business groups to remove tariffs and engage in closer economic relations with China suggest that there is still considerable will in the US to maintain a trade relationship with China.

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