China’s trade surplus has now reached a new record high with the US. Source: WNDU

China’s powerful exports appear to have reached new levels last month. The Asian country produced a record-breaking trade surplus with the US at a time when president Trump has taken an aggressive trade approach in dealing with Beijing. This recent increase in the trade surplus could fuel the ongoing trade tensions between the two countries. Experts claim that the surge in export growth recorded last month is an indication that US tariffs are yet to bite. However, they also say that it’s very unlikely that this will be sustainable.

The numbers were reported by the Chinese Custom Agency and it’s very likely they will draw a sharp response from Trump. The president has not yet responded but as the midterms get closer, many political analysts believe that he will stick to his traditional tough rhetoric on trade and use the surplus as a bargaining tool to enforce stricter protectionist policies in the future. Data from Chinese customs show that exports in September grew by 14.5% compared to the same time last year. This is the fastest growth recorded since February this year. It was also way higher than the 9.8% growth recorded a month earlier in August.

It appears as though Trump’s trade tariffs have done nearly the opposite of what he expected. Source: Washington Post

Economic experts were quick to note that based on these figures, it looks like Chinese exports have held up quite well in the wake of Trump tariffs and the trade tensions between Washington and Beijing. The experts argue that the competitive edge has largely been occasioned by a weaker Yuan. But even then, as the months go by, the tariffs will become more predominant and their impact will soon be felt on export volumes in the long term.

The Yuan has depreciated against the US Dollar by 6% in 2018 alone. Traditionally, the Yuan has always been weaker against the Dollar. At one point Trump accused China of currency manipulation. The president had vowed during his campaign that he would label the Chinese government a currency manipulator once he gets into office but later negated on the promise. Trump and other trade experts have always believed that the weaker Chinese currency has been key in China’s ascension as a global trade power. Economists believe that the weaker Yuan could be crucial in softening the blow of increasing trade restrictions by the US in the long run.

China responded to Trump’s actions by targeting his core demographic. Source: Yahoo News

The China-US trade surplus is indeed a sensitive issue in America. The surplus now stands at $34.13 billion based on the September figures up from the previous record of $31.05 billion reported in August. The tit-for-tat trade escalation between the US and China has been going on for a while now. Just recently, President Donald Trump announced $200 billion in tariffs targeting Chinese goods. Beijing has also responded with tariffs of its own some of which have targeted US farmers who form part of Trump’s core support base. The data by the Chinese Custom Agency also showed that imports into the country have decreased. Although a 14.3% growth was reported, it was significantly lower compared to the 19.9% recorded in August.