Shaky Trade Talk

Political Calculations has posted “U.S.-China Trade Continues to Shrink in Tariff War“, which is an update of “Heavy Toll of US-China Tariff War Continues“.  Two graphs carry the burden of proof that the current tariff “war” is responsible for a “heavy toll” on U.S exports and the total value of trade between the U.S. (rather, entities therein) and China. My take is that the graphs don’t support the conclusions that the writer draws from them.


Political calculations_export trend.jpg


The graph exemplifies the slippery practice of drawing trend lines and inferring the future from them. (See “What’s in a Trend?“.) The line labeled “pre-trade war linear trend” extrapolates from the 12-month moving average, but neglects the underlying cyclical pattern. Further, taking into account the cyclical pattern, one could make a case that the combined value of exports and imports began to level off in 2015 (during the Obama administration), and that there was a slight resurgence in 2018-2019, in spite of the “trade war”. A recent dip (to a higher level than preceding dips) was followed by a cyclical upturn that is firmly in the midpoint of a the range for 2015-2019.


Political calculations_trade trend


The writer says this about the second graph:

The carnage from the U.S-China tariff war continued through September 2019, where trade data for the month just released by the U.S. Census Bureau indicates year-over-year declines from September 2018’s tariff war-reduced figures.

The … chart captures that observation as measured by the year-over-year growth rate of the exchange-rate adjusted value of trade between the U.S. and China, where both China and the U.S. fall well within negative growth territory.

What I see is a long-term decline in the year-over-year growth rate, a decline that goes back at least 30 years. The only significant (and more negative) departure from the trend occurred during the Great Recession.

(See “Rethinking Free Trade III“, which repeats the main points of the first two installments.)