Tag: Exports

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China suffers U.S. tariff driven falls in exports and increased deflation concerns

China exports to U.S. suffer due to tariffs

China’s economic landscape is facing mounting challenges as exports to the United States plummet and consumer prices decline, sparking fears of deflation.

The latest trade data reveals that Chinese exports to the U.S. fell by 34.5% in May 2025, marking the sharpest drop in over five years. This decline comes despite a temporary trade truce that paused most tariffs for 90 days.

China’s consumer prices have continued their downward trend, raising concerns about deflation and its long-term impact on the economy.

The sharp fall in exports is largely attributed to high U.S. tariffs and weakening demand. While China’s overall exports grew by 4.8%, shipments to the U.S. suffered significantly, reflecting the ongoing trade tensions between the two economic giants.

Imports from the U.S. also dropped by 18%, further shrinking China’s trade surplus with America. In response, Chinese exporters are shifting their focus to other markets, particularly Southeast Asia and Europe, where demand remains relatively strong.

China’s CPI reading

At the same time, China’s consumer price index (CPI) fell by 0.1% in May 2025, deepening concerns about deflation. Deflation, the opposite of inflation, can lead to lower corporate profits, wage cuts, and job losses, creating a vicious cycle of economic stagnation.

The decline in consumer prices is largely driven by weak domestic demand, exacerbated by the ongoing real estate crisis. Many Chinese consumers are hesitant to spend, fearing further declines in property values and economic uncertainty.

China’s rare earth materials olive branch

China appears to have offered U.S. and European auto manufacturers a reprieve after industry groups warned of increasing production threats over a rare earth shortage.

China’s Ministry of Commerce on Saturday 7th June 2025 reportedly said it was willing to establish a so-called ‘green channel’ for eligible export licence applications to expedite the approval process to European Union firms. 

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China’s Exports Defy Tariff Pressures, Surge 8.1% in April

China World Trade

Despite the weight of U.S. tariffs imposed by President Donald Trump, China’s export sector has shown remarkable resilience, posting an 8.1% increase in April 2025 compared to the previous year.

This surge comes as a surprise, surpassing economists’ expectations of a modest 1.9% rise.

While China’s outbound shipments to the U.S. plunged by over 21%, exports to Southeast Asian nations soared by 20.8%, with Indonesia and Thailand seeing particularly strong growth.

This shift suggests that Chinese exporters are successfully redirecting their goods to alternative markets, mitigating the impact of U.S. trade restrictions.

The tariffs, which now stand at 145% on Chinese imports, were designed to pressure Beijing into trade concessions. In response, China retaliated with 125% duties on American goods, further escalating tensions.

However, analysts suggest that some of China’s export growth may be attributed to transshipment through third countries and contracts signed before the tariffs took effect.

Despite the export boom, China’s factory activity has taken a hit, falling to a 16-month low in April 2025, with new export orders dropping to their lowest level since December 2022.

Concerns are mounting that the tariffs could spill over into the job market, with estimates suggesting China could lose 16 million jobs tied to U.S. – bound production.

As both nations prepare for high-level trade talks in Switzerland, there is cautious optimism that a phased rollback of tariffs could be on the horizon.

While a comprehensive deal remains elusive, even minor tariff reductions could provide relief to businesses on both sides.

The coming months will be crucial in determining whether China can sustain its export momentum or if the tariff war will take a deeper toll on its economy.

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China’s exports miss forecasts as U.S. tariffs bite -imports record sharp decline

China exports drop

China’s exports in the January 2025 to February 2025 period rose 2.3% in U.S. dollar terms from a year earlier, significantly undershooting expectations of a 5% increase

That marked the slowest growth since April 2024 last year when exports increased by just 1.5% on the year, according to recently released data.

Imports surprised markets by declining 8.4% year-on-year in the first two months of 2025, the sharpest fall since July 2023.

Trump’s first round of 10% tariff hikes on Chinese goods took effect on 4th February 2025, followed by another 10% tariff increase just one month later, taking the cumulative levies to 20%.

China retaliated in kind.

* Data from the customs authority

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Exports for China in October 2024 up sharply beating expectations

Exports

China exports reportedly rose by 12.7% year on year to $309.06 billion in October 2024 – the highest jump since March 2023 when they rose 14.8% according to recent data reports.

Imports, however, declined by a more-than-expected 2.3% in October, according to customs data.

The world’s second-largest economy is facing challenges with weakening domestic consumption and an ongoing property crisis, with exports emerging as a bright spot.

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China’s exports and imports came in less than expected in September 2024 – missing targets

China exports and imports

China’s exports increased by 2.4% in September 2024 compared to the previous year when measured in U.S. dollars, and imports saw a rise of 0.3%, customs data showed Monday 14th October 2024

The figures fell short of expectations. China’s exports were predicted to rise by 6% year-on-year in September 2024, measured in U.S. dollars, as per reported analysts’ data. This increase would be less than the 8.7% rise seen in August 2024.

Imports were also projected to grow by 0.9% in September from the previous year, based on analysts’ data, which would be a slight uptick from the 0.5% growth in August 2024.

Exports have been a highlight for China’s economy amidst subdued consumer spending and a downturn in real estate.

According to reported analysis of the official data, China’s exports to the U.S., its biggest trading partner, went up by 2.2% in September year-on-year, while imports from the U.S. saw a 6.7% increase.

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China’s exports up by 8.7% in August 2024

Exports data China

August 2024 saw China’s exports increase more than expected however, imports fell short of forecasts

Exports expanded by 8.7% in U.S. dollar terms compared to the previous year, while imports saw a marginal increase of 0.5%.

The export volume of China’s rare earths decreased by 1% from the previous year, imports experienced a more significant drop of 12%.

China’s exports to its major trading partners, the U.S., European Union and Association of Southeast Asian Nations all reportedly rose in August from a year ago.

Exports to the EU grew the most, up by 13% according to preliminary calculations.

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China’s exports beat forecast – but imports drop

Bust container port

In June 2024, China’s imports fell by 2.3% year-on-year in U.S. dollar terms, missing the expected 2.8% growth forecast by analysts.

However, exports rose by 8.6%, surpassing the anticipated 8% growth. This resulted in a 2% increase in year-to-date imports and a 3.6% rise in exports for the first half of the year compared to the same period last year.

Additionally, China’s trade with the Association of Southeast Asian Nations (ASEAN) surged by 7.1% in the first half of the year, solidifying ASEAN as China’s largest regional trading partner, followed by the European Union.

Trade with Brazil grew rapidly in the first half of the year, with Chinese exports to the country surging by 24.4%.

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China’s exports up by 7.6% in May – more than expected

China exports increase

China’s exports in May increased more than anticipated, whereas imports fell short of expectations, according to customs data released on Friday 7th May 2024.

Exports increased by 7.6% in May from the previous year, surpassing the analysts’ expectations of 6% growth. Imports, however, increased by 1.8% during that time, missing forecasts of an expected 4% growth.

According to analysts’ calculations based on official data, China’s imports and exports to the U.S. and EU declined during that period. However, trade with the Association of Southeast Asian Nations (ASEAN) increased, with a 4.1% year-on-year rise in China’s exports to the region from January to May.

China’s exports to Russia decreased, but its imports from Russia grew by 7.5%. Despite trade tensions with the U.S., China’s exports have remained robust, contributing to the country’s overall economic growth.

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Alarm bells sound for China as data indicates deflationary pressure

Deflation

Deflation or inflation?

China’s consumer price index (CPI) fell by 0.3% in August from a year ago, while the producer price index (PPI) fell by 4.4% last month. This is the first time since February 2021 that the CPI has fallen, and the 10th consecutive month that the PPI has contracted. This indicates that China is experiencing deflation pressure as demand in the world’s second-largest economy weakens.

Factors that contribute to the deflation risk

  • A prolonged property market slump, which reduces investment and consumption.
  • A plunging demand for exports, due to the global economic slowdown and trade tensions with the United States.
  • A subdued consumer spending, due to the coronavirus pandemic and rising unemployment.

Deflation can have negative effects on the economy

  • Lowering profits and incomes for businesses and households.
  • Increasing the real value of debt and making it harder to repay.
  • Reducing incentives for investment and innovation.
  • Creating a downward spiral of falling prices and demand.

The Chinese government and the central bank have taken some measures to stimulate the economy and prevent deflation.

  • Cutting interest rates and reserve requirement ratios for banks.
  • Increasing fiscal spending and issuing special bonds for infrastructure projects.
  • Providing tax relief and subsidies for businesses and consumers.

However, these measures have not been enough to offset the deflationary pressure, and some analysts expect more monetary easing and fiscal support in the coming months.

Deflation definition

Deflation is the opposite of inflation. It means that the prices of goods and services are going down over time. This may sound good for consumers, who can buy more with the same amount of money. But deflation can also have negative effects on the economy.

Deflation can be caused by a decrease in the supply of money and credit, a fall in demand, or an increase in productivity. To prevent or reverse deflation, the central bank and the government can use monetary and fiscal policies to stimulate the economy, much the same as we are now seeing to deal with ‘inflation’.

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China’s exports take a dive!

China’s exports plunge

According to latest figures the country’s trade fell more sharply than expected in July 2023, as both global and domestic demand receded amid the pandemic and ongoing tensions with the United States.

China’s exports fell by 14.5% in July 2023 from a year ago, the biggest drop since February 2020, while imports dropped by 12.4%, according to Chinese data. This was much worse than the 5% decline in both exports and imports analysts were expecting.

Poor trade performance

Some of the reasons for the poor trade performance are the rising costs of raw materials, the global shortage of semiconductors, the Covid-19 outbreaks in some regions, and the U.S. sanctions on some Chinese companies. 

China’s trade with the U.S., its largest trading partner, fell in the first seven months of the year. The trade slump has added pressure on China to provide more support for the economy, which has lost momentum after a strong recovery in late 2020 and early 2021.

China’s trade drop July 2023 more than expected

China’s trade situation is also closely watched by other countries, as it reflects the health of the global economy and demand for goods. Some analysts have warned that China’s trade slowdown could signal a broader weakening of consumer spending in developed economies, which could lead to recessions later this year.  China’s trade data also has implications for inflation and monetary policy, as lower import prices could ease inflationary pressures and allow central banks to keep interest rates low.

China’s export to the U.S. and EU down

China’s exports to the U.S. plunged by 23.1% year-on-year in July 2023, while those to the European Union fell by 20.6%, CNBC analysis of customs data showed. Exports to the Association of Southeast Asian Nations fell by 21.4%, according to the data. Chinese imports of crude oil dropped by 20.8% in July from a year ago, while imports of integrated circuits fell by nearly 17%.

China’s imports from Russia fell by around 8% in July 2023 from a year ago, the data showed.

A slowdown in U.S. and other major economies’ growth has dragged down Chinese exports this year. Meanwhile, China’s domestic demand has remained subdued.

Growth areas

Among the few higher-value export categories that saw a significant increase in the first seven months of the year were: cars, refined oil, suitcases and bags. And for imports: paper pulp, coal products and edible vegetable oil were among the categories seeing significant growth in the January to July period from a year ago.