USA/CHINA - Trade Deficit and Tariffs

Arno Froese

The U.S. imported a record $539.5 billion in goods from China in 2018. The U.S. is a net importer from China in most market segments such as consumer electronics, apparel, furniture and industrial supplies. The one major exception: agriculture.

By contrast, the U.S. shipped a much smaller $120.3 billion in goods to China last year, Census trade figures showed.

Exports to China fell from almost $130 billion in 2017 as buyers shunned American soy and corn. U.S. farm exports to China fell to $5.9 billion in 2018 from $15.9 billion in the prior year.

Households and companies could pay more for a variety of consumer staples or business supplies. The U.S. imports thousands of products from China ranging from TVs and cell phones to clothing and handbags to industrial chemicals and rare metals.

The U.S. has run large deficits with China for years and in some cases no longer produces certain goods such as consumer electronics that are popular with Americans. It won’t be easy, and it might even be impossible, to reduce the gap much any time soon.

The U.S. is expected to maintain a large surplus with China in services, which totaled $40.5 billion in 2018. The surplus largely reflects spending by Chinese tourists and exchange students.

So far the trade dispute has hurt China more than the U.S. Yet economists, business leaders and investors worry that a long-lasting standoff between the two largest economies in the world could result in lasting damage to the global economy if it metastasizes.

-marketwatch.com, 27 June 2019

Arno's commentary

There is something strange going on. Back in the 1960s, the US trade deficit with Europe was simply explained, “It’s because of cheap labor in Europe.” That, however, has changed drastically. Most of the successful European countries today have a more costly labor force than the US. The average hourly wage cost in US dollars in Switzerland is $60.36, Norway $48.62, Belgium $47.26, Denmark $45.32, Germany $43.18, Sweden $41.68, Austria $39.54, United States $39.03. But virtually all these countries have a surplus instead of deficit when it comes to export/import.

In China’s case, the United States claims that market access is difficult. China, on the other hand, claims that the US practices discriminatory policy when it comes to imports and exports.

No one really knows the outcome of this trade stand-off. But China is building infrastructure all around the world without the burden of fighting wars. That’s not the case with the US. Therefore, the trade imbalance will continue, at least for the foreseeable future.

What does it mean prophetically? While the US economy continues to grow and improve, the fact is that about two dozen other nations have done significantly better, despite high labor costs. The end result seems logical, at least at this time: the US will lose its supremacy over communist China, in conjunction with other Asian giants such Japan, India, Korea, etc. They will, along with Europe, take financial and economic leadership of the world, which is partially true already. Thus, the primary goal is to create a more solidified and equal world. Here we are reminded of the works of Antichrist, who will have all the world unitedly praising and admiring him. That is the goal of the god of this world.

Arno Froese is the executive director of Midnight Call Ministries and editor-in-chief of the acclaimed prophetic magazines Midnight Call and News From Israel. He has authored a number of well-received books, and has sponsored many prophecy conferences in the U.S., Canada, and Israel. His extensive travels have contributed to his keen insight into Bible prophecy, as he sees it from an international perspective.

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