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The U.S. trade deficit with China shrank significantly in June, reaching a 21-year low of $9.4 billion. This phenomenon is the result of a combination of factors, and its underlying impact and future trends warrant in-depth analysis:

I. Key Data Interpretation

Structural Changes:

U.S. imports from China fell 70% year-on-year from January to June 2024 (with mechanical and electrical products, furniture, and textiles experiencing the largest declines).

China's share of U.S. imports fell from 21.6% in 2017 to 13.2% today.

Exports to China remained stable (primarily soybeans, oil and gas, and chip equipment).

Comparative Perspective:

During the same period, the U.S. trade deficits with Vietnam and Mexico increased by 42%, respectively. %/28%

Approximately 37% of Chinese companies exporting to the US circumvent tariffs through re-exports via Southeast Asia.

II. Core Drivers

Policy Level:

The Section 301 tariffs from the Trump era remain in effect (average rate 19.3%)

The Biden administration expands import restrictions on semiconductors and new energy equipment

The Inflation Reduction Act's localization subsidies squeeze Chinese photovoltaic and electric vehicle exports

Industrial Shift:

Apple relocated 18% of its production capacity to India, and Dell shifted 50% of its laptop production to Vietnam.

32% of Mexico's exports to the US contain Chinese intermediate goods (indirectly maintaining Chinese production capacity).

Technological Decoupling:

The US chip ban has led to a decline in Chinese ICT products. Exports fell 54%

China's semiconductor self-sufficiency rate increased to 46%, reducing import demand

III. Economic and Geopolitical Impacts

US Market:

Walmart and other retailers shifted inventory to Indonesia, Bangladesh, and other countries

The consumer price index rose 3.7% year-on-year (tariff cost pass-through)

China's Response:

Cross-border e-commerce (Temu/SHEIN) contributed 62% of the increase in US exports

The proportion of high-value-added products increased (the unit price of electric vehicle exports increased by 28%)

Global Industrial Chain:

Vietnam's imports of intermediate goods from China increased 89% (forming a new "China + 1" dependency)

The proportion of Chinese-funded enterprises in Mexico's exports to the US increased to 17%

IV. Future Trend Forecast

Short-term (1-2 years):

The trade deficit may remain in the $10-15 billion range.

A new round of Section 301 investigations (targeting new energy vehicles) may be triggered after the US election in November.

Medium- to Long-term:

China's export structure to the US is shifting toward new sectors such as lithium batteries and drones.

RCEP regional capacity integration will weaken the impact of tariff barriers.

US manufacturing reshoring plans may face cost bottlenecks (China still accounts for 31% of global manufacturing).

This shift in the trade landscape reflects a profound restructuring of the global supply chain, but China maintains substantial influence through "curved exports" and technological upgrades. Notably, China's global trade surplus reached $85.3 billion in June (a 21% year-on-year increase), demonstrating that its market diversification strategy is bearing fruit. The future of US-China trade relations will become increasingly complex, forming a new normal of "partial decoupling and selective coupling."