Daily Data: China decoupling(?)

Less trade from China means new trading partners are on the rise . . . right?

The China de-coupling story is real, but it’s probably a bit messier than we think. It’s been great for Mexico, though. Or has it?

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Daily Data

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China Decoupling

Everyone knows that importing stuff from China is on the outs. We are “decoupling” for greener pastures. That’s the story, at least, but let’s see how it’s actually going.

To kick things off, I’m going to steal this chart from Michael Waugh at the Minnesota Fed on gross imports:

It’s a little messy (but you can play around with it here):

• We are definitely importing less from China, but the dropoff is less precipitous than you might think.¹

• Mexico is an obvious (and unsurprising) winner.

• Canada is also apparently an obvious, but definitely surprising (to me) winner.

Imports from Mexico are up by about a third, while imports from Canada are up by about ~40% (off a smaller base).

In terms of what we’re importing:

• from Canada, it’s mostly “mineral fuels, oils, distillation products.”

• from Mexico, it’s a whole lot of vehicles, machinery and other stuff.

Big changes all around. Mexico is the new frontier for US trade. Canada is . . . Canada.

Either way, problem solved, life moves on, and good news for the trucks and trains hauling all that stuff.

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. . . . or nah?

Actually, it turns out there’s a catch.