by While US trade deficit with China has reached a record high, so have US exports of crude oil to the Middle Kingdom.China has overtaken Canada as the dominant destination for US crude oil this year, potentially becoming an important bargaining chip in the trade dispute between the two countries.Exports of crude oil to China rose from 0 in 2015 (when such exports were still banned) to 80.7 million barrels in 2017. In the first five months of 2018, oil exports to China rose 85% to 52.8 million barrels on the same period of 2017, exceeding those to Canada (see chart).President Trump is fixated on the US-China merchandise trade deficit, with the protectionist bias to his policies hoping to curb imports, and encourage production of goods for domestic consumption back to the US.Not much effort
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While US trade deficit with China has reached a record high, so have US exports of crude oil to the Middle Kingdom.
China has overtaken Canada as the dominant destination for US crude oil this year, potentially becoming an important bargaining chip in the trade dispute between the two countries.
Exports of crude oil to China rose from 0 in 2015 (when such exports were still banned) to 80.7 million barrels in 2017. In the first five months of 2018, oil exports to China rose 85% to 52.8 million barrels on the same period of 2017, exceeding those to Canada (see chart).
President Trump is fixated on the US-China merchandise trade deficit, with the protectionist bias to his policies hoping to curb imports, and encourage production of goods for domestic consumption back to the US.
Not much effort has been put into promoting more exports to China so far as an alternative to imposing tariffs and risking a trade war.
The US could have tried to develop its oil exports to China, for example, an area highlighted by the Chinese authorities when they tried to reach a trade deal with the Trump administration in June. But given the deterioration in trade relations, the Chinese authorities have singled out booming US oil imports as a potential area for a second wave of counter-tariffs.
This said, the rapid rise in US oil exports to China has not been sufficient to plug the US’s trade deficit with China, which has continued to increase to new highs this year: it reached USD 389 billion in the 12 months to May 2018, up from USD 376 million in 2017.
