The U.S. trade deficit with China fell last year to its lowest level in over a decade, but that doesn’t mean the country has kicked the Chinese import habit. Chinese and Western manufacturers have found numerous ways around tariffs that have helped reshape trade flows, and the WSJ’s Greg Ip writes in a Capital Account column that they are likely to redouble those efforts if the levies go still higher. The overall U.S. trade deficit in goods shrank last year, mostly through a sharply reduced gap with China. One driver is that U.S. importers may have overordered in 2022, leading to swollen inventories and less imports in 2023. More fundamentally, the shrinking trade deficit overstates how much the U.S. has
reduced its consumption of Chinese-made products. Imports from Vietnam and Mexico have surged, but much of the value of those goods consisted of inputs originally sourced in China.
- The U.S. bought more goods from Mexico than China in 2023 for the first time in 20 years. (New York Times)
