China just recorded the largest trade surplus with the US on record

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  • China’s trade surplus increased sharply in June, including with the United States.
  • Its surplus with the US jumped to $US28.97 billion last month, larger than the $US24.58 billion recorded in May. Over the first half of the year, the cumulative trade surplus stood at $US133.76 billion.
  • Both sides have already introduced tariffs on $US34 billion of the others imports, with more possibly on the way.

China’s trade surplus increased sharply in June, including with the United States.

According to China’s National Bureau of Statistics (NBS), the surplus swelled to $US41.61 billion last month, up from $US24.92 billion in May and expectations for a smaller increase to $US27.6 billion.

In what will do little reduce trade tensions between the two sides, China’s trade surplus with the US jumped to $US28.97 billion, larger than the $US24.58 billion recorded in May.

In US dollar terms it was the largest on record, according to calculations from Reuters.

Over the first half of the year, China’s trade surplus with US stood at $US133.76 billion.

From a year earlier, the dollar value of total Chinese exports grew by 11.3%, down from 12.6% in the year to May. Despite the deceleration, that topped economist forecasts for a smaller increase of 10.0%.

Helping to explain the large upside beat for the trade surplus, imports grew by 14.1% in the year to June, down from 26% in May.

Markets had been expecting a smaller deceleration in annual growth to 20.8%.

Despite strong growth in both exports and imports over the year — reflecting stronger global economic conditions as well as higher commodity prices, especially crude — the expansion in the trade surplus with the US is noteworthy, and will do little to diffuse the escalating tit-for-tat trade war between the two global superpowers.

With $US34 billion in tariffs already in place, and another $US16 billion arriving in less than two weeks, the US government announced this week that it may apply additional 10% tariffs on $US200 billion worth of Chinese imports as soon as early September.

The comprehensive list of over 6,000 additional goods could see the United States apply tariffs on around half of total Chinese imports entering the country.

China has already announced reciprocal tariffs on $US34 billion worth of US imports and has pledged to retaliate to the proposed list of new US tariffs should they too be introduced.

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