Prof. ST Hsieh
Director, US-China Energy Industry Forum
May 4, 2022
Joe Biden, President of the US, has many tough challenges. That comes with his job title, President of the US; it is a challenging job, probably the most challenging job in the world today. But President of the US is also very powerful; it holds the key to war and peace around the world.
For President Biden, he is challenged at home: his overall approval rating is around 40% and many more blames him for the highest inflations in years. Worse, there is no sign of relief insight. The US mid-term election will be held on November 8th this year, about six months away, his party does not look like a winner.
US trade deficit is not news, but when it tops $100 billion in one month, it is very alarming. The real bad news is that: The prevailing domestic and overseas economic environment could keep the deficit pinned near record levels and impose a significant headwind to U.S. GDP growth.
US trade deficits with China is huge, Biden administration has not been able to make public on his “China Strategy.” The simple reason is that Biden’s team is divided as far as how to mange Trump’s tariff against China. Biden’s vague accusation that “China Trying to Meddle With Competition Bill” is purely for domestic consumptions. If Biden has a real case against Chinese Communist Party, then his state department should protest to China and immediately sanction the individuals who are responsible for this meddling. His “competition bill” is in trouble because:
While members of both parties support the $52 billion in the legislation for domestic semiconductor manufacturing, they disagree on other provisions and final passage is still months off.
U.S. trade deficit jumps 22% and tops $100 billion for the first time ever
Last Updated: May 4, 2022 at 8:49 a.m. ETFirst Published:
Imports climb to record $351.5 billion in March
The numbers: The U.S. trade deficit leaped 22% in March and topped $100 billion for the first time ever, reflecting a big appetite among Americans for foreign goods. They’re also paying higher prices for oil and other products due to soaring inflation.
The trade gap rose to $109.8 billion from $89.8 billion the prior month. Economists polled by The Wall Street Journal had forecast a $106.7 billion trade gap.
Imports leaped 10.3% in March to a record $351.5 billion. High inflation, especially oil prices, has added to the cost of imports.
Exports rose 5.6% to $241.7 billion, also a record.
Big picture: The U.S. has repeatedly set record trade deficits during the pandemic. Because the U.S. has recovered faster than other countries, Americans can afford to buy more imports and they are gobbling them up.
Yet trade deficits subtract from gross domestic product, the official scorecard for the economy. GDP contracted by 1.4% in the first quarter mostly because of the huge trade gap.
Key details: U.S. imports topped $300 billion last fall and have now exceeded that benchmark for five months in a row.
The U.S. in March imported more oil, autos and consumer goods such as cell phones, clothes, furniture, toys and computers.
The sharp increase in imports since last fall also partly reflects American ports more quickly unloading a record backlog of cargo ships waiting offshore.
Exports of petroleum products, crude oil, fuel oil and natural gas rose in March, as did autos and parts. Rising exports are being propelled by higher prices for oil.
U.S. exports have rebounded more slowly than imports during the pandemic, but they’ve also risen to record highs.
Looking ahead: “The prevailing domestic and overseas economic environment could keep the deficit pinned near record levels and impose a significant headwind to U.S. GDP growth,” said U.S. economist Mahir Rasheed of Oxford Economics.
Tue, May 3, 2022, 9:54 PM
(Bloomberg) — U.S. President Joe Biden accused China of trying to interfere in congressional negotiations over a broad competition bill that would bolster domestic semiconductor manufacturing.
“Fundamentally, this is a national security issue. This is one of the reasons why the Chinese Communist Party is lobbying folks to oppose this bill,” Biden said Tuesday in Troy, Alabama. “And it’s an issue that unites Democrats and Republicans. So, let’s get it done.”
Biden’s comments — made during remarks that centered chiefly on the war in Ukraine — were among his most critical yet toward China’s Communist Party. He often cites past conversations with Chinese President Xi Jinping in which he challenged Xi’s view that democracies cannot deliver for their people.
The Senate and House could soon begin the formal conference process so the two chambers can reconcile their different versions of the measure, which is intended to strengthen competition with China. While members of both parties support the $52 billion in the legislation for domestic semiconductor manufacturing, they disagree on other provisions and final passage is still months off.
The Chinese Embassy in Washington has been seeking meetings with administration officials, congressional offices, think tanks and companies to gather information about the status of the bill and what provisions were likely to make it to the president’s desk, people familiar with the meeting requests said. Administration officials have all declined the requests, as have many of the congressional offices, according to the people.
An embassy spokesperson didn’t respond to a request for comment. The White House declined to provide more details of the president’s claim.
Although the Chinese Foreign Ministry has previously said how the U.S. develops “is its own business,” it has rejected what its views as efforts to suppress China’s growth. Foreign Ministry spokesperson Wang Wenbin told a regular news briefing in March that draft provisions of the legislation “exaggerate the ‘China threat theory’” and urged its supporters to to drop their “Cold War, zero-sum mentality.”
After 15 months in office, the White House has yet to articulate a comprehensive China strategy, including what it would do with respect to economic disputes. U.S. Secretary of State Antony Blinken is set to outline the administration’s policy toward the country in a speech Thursday morning, but people familiar with the plans said he wasn’t expected to lay out any new initiatives or details on the economic front.
Republicans believe the lack of a China strategy that distinguishes Biden from former President Donald Trump represents a vulnerability for Democrats in the November midterm elections.
Biden Team Splits on New Rules for U.S. Investments in China
U.S. officials for months have been deliberating about potential tariff reduction, new trade probes and the enforcement of Trump’s “phase one” trade deal. Biden’s team continues to be at odds over what to do with hundreds of billions of dollars in existing tariffs on Chinese goods, and has diverging views of whether and how hard to scrutinize U.S. investments into China.
(Updates with China’s previous comments on bill in eighth paragraph)