Trade War 2 0: U S Stockpiles, China Stumbles—What’s Really Happening?

hi I'm d Sean welcome to digging to China where we explore China in depth to review unique perspectives let's talk about the US China trade War 2.0 it's officially underway in the first two months of this year China got hit with an extra 20% tariff now Trump during his campaign promised to slap a massive 60% tariff on China this year so everyone's expecting more tariff hikes to come one after another because of this us importers are stockpiling Goods like crazy and we can already see that in the January trade numbers from the US in January the US imported $ 41.2 billion worth of stuff goods and services combined that's a 10% jump from last year meaning they brought in an extra 36.5 billion dollar compared to January 2024 when you zoom in on just a good the US boosted Imports mainly from Mexico and China they bought 3.7 billion more from Mexico and $5.8 billion more from China you think with all this stock pilot in the US China the world's biggest export would see a huge surge in exports after all even Goods not shipped directly to the US often end up there through other countries so China's export should have spiked in January and Fe right well here is the surprise they only grew by 2.3% that's pretty weak so today we are going to figure out why China's export growth is so sluggish at the start of March China's custom office dropped the trade data for the first two months exports hit $540 billion up just a 2.3% from last year way below the 5% growth the market expected compare that to last December when exports solded by 10.7% that's the kind of jump you'd expect with us stock party but 2.3% over two months did US importers stop holding nope not yet let's check the US side they haven't released the February data yet so we'll stick to January us Imports that month climbed 10% and imports from China specifically up 6.2% last year in January 2024 it was a $ 35.8 billion this year it hit $ 41.6 billion even with China's new year holiday showing slowing things down in late January but here's where it gets out China's custom says export to the US for January and February were 75.5 billion dollar also up 2.3% that's a tiny bump did the US import as a quit stop part in February I don't think so everyone still expect expect tariffs to rise the first two months only saw that one 10% hike no new tariffs yet so stockpiling should have kept going in February it's only stopped after say a second 10% tariff hits in March and this makes me question China's Customs data and there is more US states stats show they exported $9.9 billion to China in January 2025 down from 12 billion a year before a 17 and a half % drop but China's data say they imported 26.5 billion dollar from the US over two months up 2.7% from last year the US says exports to China shrank while China says import from the US grew that's a huge mismatch I don't believe February's numbers could flip things that much why does this happen well the US and China count trade differently China tracks exports based on price when Goods leave their ports no shipping or Insurance costs included the US adds those costs to Imports so us import number should be higher than China's export numbers but right now it's the opposite us Imports look smaller than China's exports shipping delays could explain some of it Goods leaving China in late January might hit the US in February but with the Chinese New Year at the end of January factories were likely closed not shipping tons of stuff so that's not it let's flip it US exports to China the US counts export the prices without shipping cost and they ship early they their export numbers should be China's import numbers but nope China's import stats from the US are way higher than what the US Reports exporting the only answer China's Customs is using some special meth that pumps up both their Import and Export figure I'll leave it at that you can connect the dots another weird thing in China's two-month data who's buying more from them the US Hong Kong Assan and India saw increases but Russia a hot Market the past two years dropped almost 11% and those belt in the road country China's banking on for future growth up just 1.3% what's that mean China's exports still lean hard on the US Goods sent to Hong Kong asan and India often end up in the US anyway when the US stockpiles those exports rise but places like Russia or Bel in the roaden Nations their demands weak without something big like Russia's War prep a few years back they can't keep buying a ton from China so here is the takeaway from China's export data as this trade War ramps up China's in trouble if us tariffs hit 60% or or more this stockpiling we are seeing now will dry up and the China's other trade Partners think South America or Africa can't step in they don't have the cash to replace us buying power oh and one more thing people say us tariffs just hurt American shoppers but check this China's Customs data shows luggage exports to the US grew 2.3% in volume but prices crashed to 22.3% closing price fa 9% the shoes 12.3% due to math from their tables value divided by quantity plus the unen weaker this year 7.3 to the dollar versus just over seven last year factor that in and the Chinese goods are even cheaper so are us consumers really paying these tariffs you tell me this bring up a problem though to keep prices low Chinese Goods might lose quality Walmarts being leaning on this Chinese supplier saying tarff goes up you price go down cover the cost Walmart's always been tough but supplies are like fine we'll cut the price but quality is out of the window want quality we can only drop price a little so soon Chinese stuff in the US might not be as good they are slashing prices to keep orders on March 12th Chinese officials called in Walmart's top brass State tv reported that several government departments including the Commerce Ministry sat down with the US retail giant they wanted to know about Walmart's push to get Chinese suppliers to cut prices China's take this could mess up the global supply chain and hurt companies on both sides plus American Shoppers they warn the war up keep this up and Beijing might step in with tougher measures here's what this News tells us China can't just match us tariffs blow for blow in this trade War why their Trade Surplus is huge they export way more to the US than the US do it to China so China's tariffs don't Sting the us as much instead China's hitting back with other tricks like targeting big players like warmer they are saying we might not win with tariffs but we can pressure your companies to feel the heat think back to Trump's first term he jacked up tariffs and every even worry the US consumers were to pay more but that didn't happen prices didn't Spike why not Chinese suppliers slashed their prices and the Y got weaker those two things soaked up the Tariff costs American Shoppers barely noticed a difference now fast forward to today us companies like warmer are trying that same Playbook pressuring suppliers to drw prices again but China's not having it this time they want those tariffs hikes to hit us wallets not theirs if American Shoppers feel the pinch it could sway elections and slow down Trump's plan that's a new strategy for round two of this trade War last time China let the US importers lean on their suppliers not anymore they are going straight for the big fish warm up they are threatening actions to make sure those tariffs costs don't just vanish into lower prices again this is a wakeup call for the us if China keeps playing this game the trade War isn't just about tariffs anymore it's about who can outmaneuver who the US might have to fight back with more than just taxes at the Border in a few months we'll check export the prices again to see if this keeps up we'll also look at the US store prices and let you know how Chinese goods are holding up here now China's domestic demand it's rough import are a dead giveaway in the first two months China brought in $370 billion in Goods down 88.4% from last year everyone thought it grow 1% but it tanked this is the worst import slumps in two years what's China cutting stuff they can make themselves taiwan's chips they can't so Imports There Rose 8.9% but India's raw materials and the farm Goods down 28 .7% replaced by Chinese ma stuff it's the same elsewhere Latin America Imports fail 15.4% Africa 10.7% belt in the road country 6.1% even Australia's resources dropped 27.7% Russia's 3.9% these are oil and mineral countries if China can't import that it means production and spending at home are fading fast so summing it up China's trade numbers January and February were a let down way below what anyone expected the us though is still stockpiling Imports up 10% but China's data barely shows that you only see it when you compare other export spots China's growth these two months hinges on us stockpiling places like India Vietnam and Hong Kong where Goods head to the US saw big export Boost from China outside the US though exports tanked even to the EU and Russia plus China's key exports like luggage and clothes are dropping in price they are cutting cost to grab orders eating the US tariff hit that's squeezing profits which feeds deflation and imports crashing because China's demand is weak they can't even buy oil or ORS opa's not banking on China's recovery anymore they are swapping Imports for homegrown stuff to keep a trade surplus except for taiwan's chips which they need for their big Tech push that's up big they are betting on Innovation to save the economy but who knows when that'll pay off thank you so much for watching if you find this video helpful please like it drop a comment below and hit the Subscribe button right here it really helps YouTube suggest my video to others I'll be back with more content soon until then be well