US export of goods to China fell 7% in 2018

Services exports rose 4.1% to $56 billion; trade supports 1.1m jobs in US, according to report

US exports to China slumped by 7 percent last year, as the trade dispute between the two countries began to take a bite, but still outpaced export growth to the rest of the world over the last decade, underlining China's important role in sustaining US jobs, according to a US-China Business Council (USCBC) report.

Total US goods exported to China were valued at $119 billion, down $9 billion from 2017.

Despite the drop, exports to China increased 73 percent over the past 10 years, while exports to the rest of the world grew only 57 percent, the council said in its 2019 State Export Report released on Wednesday.

"Exports to China support over 1.1 million American jobs. States across the country have jobs that are supported thanks to US exports to China, making trade important to not only US companies and consumers, but also US workers," the report said.

The decline seems to have lingered into this year. In the first three months of 2019, China's trade with the US amounted to $121.7 billion, down by 11 percent year-on-year, according to China Customs statistics.

The USCBC report said the 2018 export contraction is likely due to the trade conflict between the two countries, which resulted in retaliatory tariffs slapped on each other's goods, and states across the country have felt the effects.

For example, 34 states, including those in the Midwest and Plains regions that export farm produce, sold fewer goods to China in 2018 than in 2017.

"Trade tensions and punitive actions have consequences for the national economy, as well as at the state level," said Craig Allen, president of USCBC.

He said the two countries need a "substantive agreement" to address business concerns that also must "include a plan of action for the removal of all or most of the tariffs to reverse the damage we saw in 2018".

The 11th round of high-level economic and trade talks is scheduled for next week in Washington, following negotiations in Beijing on Tuesday and Wednesday co-hosted by Chinese Vice-Premier Liu He and US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

No details of the latest talks were available, but various reports have said negotiators made headway on thorny issues in the US-China trade dispute, meaning the two sides are drawing even closer to a trade deal.

The USCBC said a rollback of at least some of the tariffs imposed by both governments is expected, though it is not yet clear how many products will receive relief.

Allen said that if the agreement includes a major purchase of US goods, as some news reports suggest, US export growth could resume in 2019, according to the USCBC's press release.

US services exports to China provided a counterpoint to goods, rising 4.1 percent to $56 billion, the council said in the release.

Over the last decade, US services exports to China grew significantly more rapidly than to the rest of the world — 258 percent versus 49 percent, it said.

Exports of US goods to China come from a wide range of industries, including transportation equipment, semiconductors, and oil and gas, sustaining logistics jobs in America's ports and throughout the country.

US services exports to China included travel and education, industrial processes, and management services, among other industries, according to the report.

In goods and services exports, China is the third-largest trade partner for the US.

China was the top goods export market for four US states in 2018, and among the top five markets for 44 states.

In services exports, China was the top market for 15 states in 2017, and a top five market for 49 states, according the council's annual report.