China and the U.S. are shipping goods to each other at the briskest pace in years, making the world's largest bilateral trade relationship look as if the protracted tariff war and pandemic never happened.
Eighteen months after the Trump administration signed the "phase one" partial trade deal, the agreement has turned out to be a truce at best. The U.S. trade deficit hasn't shrunk, most levies are still in place and it hasn't led to negotiations over other economic issues.
Yet, bilateral trade in goods is an area of stability in a relationship that has otherwise continued to deteriorate, with rising tension over Hong Kong, Taiwan, human rights, the origins of the covid-19 pandemic, accusations of computer hacking and many other flashpoints.
Monthly two-way trade, which tumbled to $19 billion in February 2020 amid shutdowns in Chinese factories, rebounded over the past year to new records, according to official Chinese data. That boom looks set to continue, with China purchasing millions of tons of U.S. farm goods for this year and 2022, and stuck-at-home U.S. consumers still shopping and importing in record amounts.
While the U.S. government's numbers differ somewhat, the bustling trade has defied all expectations that the tariffs on hundreds of billions of dollars worth of merchandise would force a decoupling of supply chains.
Instead, both sides have learned to live with the tariffs, with Chinese firms buying more to fulfill the terms of the 2020 trade deal, and U.S. companies purchasing goods they can't get elsewhere to meet elevated household demand fueled in part by trillions of dollars in government stimulus.
"We've seen the strong consumer demand that's been occurring throughout the pandemic, and we've seen the import levels just go through the roof," said Jonathan Gold, vice president of supply-chains and customs policy at the National Retail Federation, which represents vendors from mom-and-pop stores through the big-box chain behemoths. "That's a strong sign that the economy continues to recover."
Exports from South Korea and Taiwan to the U.S. have also risen over the same period, underscoring the strength of U.S. demand despite one of the worst outbreaks of covid-19 of any nation.
Almost half of the $259 billion in cargo moving in and out of Los Angeles port -- the U.S.'s biggest -- involves China and Hong Kong. U.S. demand for goods continues unabated, with record inbound shipments to the port in May as companies start to restock ahead of the Christmas shopping season.
"All signs point to a robust second half of the year," Los Angeles port Executive Director Gene Seroka said during a recent press briefing, noting that fall fashion, back-to-school, Halloween and Christmas goods were already arriving on the docks.