In July 2019, the gap between the pre-trade war trend and the trailing twelve-month average of the value of goods exchanged between the U.S. and China expanded to $10.4 billion. The cumulative gap since the first tariffs were imposed in March 2018 has now grown to $62.8 billion.
That cumulative gap is measured with respect to a counterfactual trend, which represents what the total value of direct trade between the U.S. and China could reasonably have reached in the absence of the two nations' tariff war.
There is another way to assess the direct economic losses that have accumulated in the value of trade between the two countries as a result of the tariff war. We can compare the current downturn in the actual recorded trailing twelve-month average of the value of goods and services exchanged between the U.S. and China with previous downturns, as indicated by the heavy black line on the above chart.
Going back to the Great Recession, the trailing twelve-month average of trade between the U.S. and China peaked at $34.3 billion in October 2008, which then proceeded to drop to a low of $30.0 billion in October 2009 before beginning to recover. That $4.3 billion drop in value represents a decline of 12.5%, or one-eighth the combined value of goods and services traded between the U.S. and China.
Ten years later, the trailing twelve-month average in the value of direct trade between the U.S. and China peaked at $55.7 billion in October 2018 and has since experienced a $4.9 billion drop in value through July 2019, exceeding the nominal loss of direct trade recorded during the Great Recession, the worst economic downturn since the Great Depression of the 1930s.
In percentage terms, the loss in trade coinciding with the U.S.-China tariff war represents 8.7% of the peak in the trailing twelve-month average value of goods exchanged between the two countries. To match the Great Recession's overall percentage trade volume losses, the trailing twelve-month average of trade between the U.S. and China will have to fall by another $2.1 billion, to $48.7 billion.
Assuming nothing changes in the U.S-China trade war to affect its current rate of decline, that level could be reached in or by November 2019.
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