U.S. dynamic export dependence on China

The U.S.-China trade dispute seems at risk to escalate further. Hanse data show the U.S. had considerable success in exporting to China in a narrow range of sectors amid a high concentration of its trade. This may make certain U.S. industries including mineral fuels, aircrafts and oil seeds and oleaginous fruits particularly vulnerable to sustained trade tensions.

China exports far more to the U.S. than the U.S. exports to China. In 2017, the U.S. imported US$526 billion in goods from China and exported US$130 billion to China. This seems to make China significantly more vulnerable to a decline in trade with the U.S. Yet, U.S. exports to China are relatively highly concentrated in the U.S. fastest growing export sectors. Nowhere has the U.S. been more successful in expanding market share in its most dynamic export sectors than in China. 

The U.S. 10 fastest growing export sectors between 2007 and 2017 (HS 2002 at 2 digits out of 99 chapters) are 27 mineral fuels, 88 aircraft, 12 oil seeds and oleaginous fruits, 90 optical, checking, medical instruments, 30 pharmaceutical products, 71 precious, semi-precious stones, 02 met and edible meat offal, 08 fruit and nuts, 22 beverage and 38 chemical products not else specified. Those sectors increased in U.S. exports from representing 26.1 percent of total U.S. exports in 2007 to 36.5 percent in 2017. In 2017, by destination, China represents 9.9 percent of total exports of those sectors up from 5.8 percent in 2007 and those sectors represent in 2017 42.9 percent of total U.S. exports to China up from 27.0 percent in 20017.

The U.S. exports of the 10 sectors are marked by significant differences by export destination. In 2017, Canada makes up 9.7 percent of exports of the 10 sectors down from 12.0 percent in 2007 representing 19.3 percent of U.S. exports to Canada. Mexico has a share of 8.6 percent in U.S. exports of the 10 sectors up from 6.0 percent in 2007 making 19.9 percent of U.S. exports to Mexico. 24.5 percent of the 10 sectors go to the E.U. (28) down from 30.0 percent in 2007 and 6.0 percent go to Japan down from 7.6 percent in 2007.

Figure 1. U.S. fastest growing exports (share to China, change 2007-17, percentage points)

The impact of China on U.S. trade is profound. China has increasingly tilted U.S. exports towards its fastest growing sectors. While the E.U., Canada and Japan have become less important Mexico and in particular China have during the past 10 years become increasingly the export destination for the U.S.’ most dynamic sectors. Mounting tension with China therefore now risks undermining the emerging dynamism in U.S. exports.