U.S. Businesses Increase Orders from China Ahead of High-Stakes Summit
- U.S. orders for Chinese goods surged before the summit between Trump and Xi.
- Trade truce extended, lowering tariffs and easing pressure on exporters.
- Following the summit, both leaders may meet again at APEC and G20 events.
American businesses have significantly increased their orders for Chinese goods in the weeks leading up to a critical summit this week between President Donald Trump and Chinese leader Xi Jinping in Washington, marking Xi’s first state visit to the U.S. in over a decade. This uptick was described as a “surprise” by China Beige Book, a New York-based research firm that surveyed 1,296 Chinese companies between September 1 and September 22, noting that shipments to the U.S. rose both year-over-year and month-over-month as “China’s relative tariff position improved.”
The report indicated that the gauge measuring U.S. orders—determined by the proportion of surveyed companies reporting an increase in orders minus those reporting a decrease—rose to 13 in September, up from negative-12 a year prior and 3 in August. However, the overall Chinese domestic and export orders remained below the previous year’s levels, and new orders did see a decline compared to August.
This increase in U.S.-bound orders coincided with preparations for a favorable outcome at the summit, during which both countries have agreed to extend a trade truce by two months, pushing it to January. This agreement helps maintain lower tariffs, suspends restrictions on rare earth exports, and delays increased port fees on ships. Furthermore, reports indicated that the U.S. plans to defer a new set of tariffs related to industrial overcapacity until after this week’s summit, thereby lessening immediate pressure on Chinese exporters. Currently, the effective U.S. tariff rate on Chinese goods stands at approximately 23%, notably greater than the rate imposed on other major trading partners, as per Barclays.
These export order statistics align with recent official data revealing that China’s ports experienced their busiest week on record in the lead-up to the summit, a further indication of an uptick in trade amid hopes for improved bilateral relations. Following the truce extension, the Eurasia Group has raised its projections for ongoing stability in U.S.-China relations to their highest level since Trump resumed office. The firm also suggested that the brief extension of the truce is unlikely to ignite new tensions, as both governments seem disinclined toward escalation.
Dan Wang, the China director at Eurasia Group, stated, “Neither government has an interest in renewed escalation,” and anticipated both sides would seek immediate commitments to uphold the fragile stability. Washington is likely to pursue quicker Chinese approval for rare-earth export licenses for U.S. users and push for increased purchases of U.S. agricultural products, while Beijing expects the U.S. to continue its current pause on arms sales to Taiwan.
Looking ahead, both leaders are expected to meet again at the APEC summit in Shenzhen this November, with a potential gathering at the G20 summit hosted by the U.S. in Miami in December. However, no bilateral meetings have been confirmed following this week’s summit.
News Courtesy of CNBC
