China now sells fewer goods to the US than Mexico or Canada do

Mexico and Canada have replaced China as the top providers of goods to the US as a nearshoring push encourages more diversified supply chains.

The US imported about $203 billion in goods from China in the first six months of the year, 25% less than in the same period in 2022, based on the latest unadjusted data from the Commerce Department. The figures are not adjusted for inflation.

The Asian country is now the third-largest provider of merchandise to the US behind Mexico and Canada. Goods imports from Mexico were up 5.4% in the first half from a year ago. Germany and Japan round out the top five.

On an annual basis, China had ranked as the top supplier of goods to the US for more than a decade, with the trade ties between the two countries reaching a peak last year. Bilateral trade is being challenged by the widening split between Washington and Beijing over issues including human rights, fair trade and competition for technology and markets.

However, as US consumers grow more discerning in their goods spending, demand for China-made products including phones and clothes has been cooling. At the same time, the supply chain issues of the pandemic years sparked a push for more logistics diversification, which is already translating into more imports from its neighbors to the north and south.

On a seasonally adjusted basis, US imports from China fell to $33.5 billion in June, the lowest since the immediate onset of the pandemic, the Commerce Department’s report showed Tuesday. The total US merchandise trade deficit with China narrowed during the month.