In 2019, the United States exported approximately 107 billion U.S. dollars worth of merchandise to China, the lowest value since 2011. Nevertheless, China was one of the top five goods export destinations for the majority of states that year. California, Texas, Oregon, South Carolina, and Washington were the five leading states exporting to China, jointly contributing around 42 percent of commodity exports. Among the export leaders, only Oregon and South Carolina saw an increase in their exports to China in 2019. In contrast, Washington witnessed a loss in exports of around nine billion U.S. dollars due to economic difficulties affecting several major companies in the aerospace product industry.
Civilian aircrafts and their parts, semiconductors, passenger cars, industrial machines, and agricultural goods such as soybeans were among the most exported commodities to China. The theory of comparative advantage suggests that under the condition of international trade, countries could profit from the specialization in the production of goods that they are relatively efficient in producing. The United States’ comparative advantage over China lies in high-tech manufacturing and agricultural products, reflected in the leading export categories to China. California, home to numerous technology enterprises, exports electronics such as semiconductors to China to be inserted into mobile phones. Exports from Washington to China are dominated by the aerospace sector, as it is home to major assembly sites of Boeing. By comparison, China’s comparative advantage lies largely in labor-intensive, manufactured goods.
Despite the relatively high export volume from the U.S. to China, the latter is also the main source of the United States’ trade deficit. In 2017, the growing U.S. imports from China exceeded its exports by nearly 375 billion U.S. dollars becoming a major political issue. In July 2018, the Trump administration made an official launch of the new trade tariff policy towards Beijing with a goal to reduce the trade deficit and change other Chinese trading practices. This resulted in China’s immediate retaliation and escalated further until a phase-one trade deal was signed in January 2020. The U.S. agreed to reduce some of the new tariffs and China pledged to increase its imports of the U.S. goods.