(Bloomberg) – China and the United States are sending goods to each other at the fastest pace in years, making the world’s largest bilateral trade relationship seem like the protracted tariff war and pandemic is unsuccessful. have never happened.

Eighteen months after the Trump administration signed the trade deal, the deal has turned out to be a truce at best. The US trade deficit has not narrowed, most of the levies are still in place and that has not led to negotiations on other economic issues.

And yet, bilateral merchandise trade is an area of ​​stability in a relationship that has otherwise continued to deteriorate, with rising tensions over Hong Kong, Taiwan, human rights, the origins of the pandemic. of Covid-19, hacking charges and many more. flash points.

Monthly bilateral trade, which fell to $ 19 billion in February last year due to Chinese factory closures, has rebounded in the past year to new highs, according to official Chinese data. And that boom is expected to continue, with China buying millions of tonnes of American farm produce this year and next, and American consumers stuck at home still shopping and importing record amounts.

Although the US government figures differ somewhat, dynamic trade has defied all expectations that tariffs on hundreds of billions of dollars of goods would force a decoupling of supply chains. Instead, both sides have learned to live with taxes, with Chinese companies buying more to meet the terms of the 2020 trade deal, and US companies buying goods they can’t get elsewhere to meet. to high household demand fueled in part by trillions of dollars. in reviving the government.

“We have seen the strong consumer demand that has occurred throughout the pandemic, and we have seen import levels soar,” said Jonathan Gold, vice president of supply chains and customs policy at the National Retail Federation, which represents mom-and-pop store salespeople through the big box chain giants. “This is a strong sign that the economy continues to recover.”

Exports from South Korea and Taiwan to the United States have also increased over the same period, underscoring the strength of American demand despite one of the worst Covid-19 outbreaks of any country.

Nearly half of the $ 259 billion in freight entering and leaving the Port of Los Angeles – the largest in the United States – is to China and Hong Kong. U.S. demand for goods continues unabated, with record inbound shipments to the port in May as businesses begin to restock ahead of the Christmas shopping season.

“All signs point to a strong second half,” Port of Los Angeles executive director Gene Seroka said at a recent press briefing, noting that fall fashion, back to school, Halloween and holiday items were already arriving on the quays.

With tariffs in place on more than $ 300 billion in imports from China, from shoes and clothing to electronics and bicycles and even pet food, many U.S. retailers are choosing to absorb the costs and reduce their profit margins, said NRF’s Gold. Some pass them on to consumers.

Businesses are also facing backlogs and bottlenecks at US ports and rising shipping costs.

“Between the cost of fares and the increase in transportation costs that we’re seeing is impacting business bottom lines,” Gold said. “They have seen significant cost increases as a result of both the trade war and the transportation crisis we are facing.”

The Biden administration has not said whether it plans to continue the deal and revise US policy towards China, but US Trade Representative Katherine Tai called the trade relationship “imbalanced” and the secretary Treasury Janet Yellen said the deal does not address fundamental issues with China, the outlook is unfavorable.

On top of these tensions, China’s purchasing targets expire at the end of the year, and the nation is well behind what it had promised it would be now. These targets were initially considered unrealistic and problems like the Covid-19 pandemic or the immobilization of the Boeing 737 Max put them even further out of reach.

Even if the deal is canceled, the lesson of the past four years or so is that even if there is political will, it is more difficult to stop or divert international trade than you might think.

As Beijing misses its purchasing targets, China refrains from buying planes, and companies shift U.S. auto production to avoid being hit by trade war tariffs, the The deal between the world’s two largest economies is “rather irrelevant at this point,” said Chad Bown, senior researcher at the Peterson Institute for International Economics, whose latest research has focused on the pact.

“China buys what China needs,” Bown said. “If he buys more certain American products, he’s probably doing it for his own benefit. “

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