China’s exports to the US plunged in May as a temporary trade truce between the world’s two largest economies proved “too little, too late” to prevent chaos at ports.
Chinese shipments to the US plummeted 35% in May compared to the year before, according to government data released Monday.
That’s the largest decline since February 2020, when the COVID-19 pandemic caused a supply chain crisis.
It comes after President Trump agreed to lower tariffs on China to 30% from 145% and Beijing slashed rates on the US to 10% from 125% for 90 days.
“The prohibitive tariffs were only lifted in mid-May, the damage was already done,” Tianchen Xu, senior economist at Economist Intelligence Unit, said.
The nation also reported a jump in exports to other parts of the world last month. Chinese shipments to Southeast Asia and European Union countries rose 15% and 12%, respectively. Those sent to Africa jumped more than 33%.
China saw the same boom in exports to other countries in April, when Chinese exports to the US dropped 21%.
“These are obviously transshipments to the US via 3rd countries. Thailand and Vietnam look bonkers,” Robin Brooks, senior global economy fellow at Brookings Institution, said in a social media post.
He nodded to a method used by exporters of sending goods to other countries facing lower tariffs before spiriting them off to the US, so they can skirt around Trump’s steep taxes on China.
China reported its gross domestic product grew 5.4% during the first three months of the year as companies rushed to import goods ahead of the tariffs.
But the nation has faced a persistent deflation issue and a more hesitant consumer.
In a sign of weak demand, imports to China fell 3.4% in May from the year before – a far drop from the 0.2% dip the month before and much worse than expectations.
That landed China’s trade surplus at $103.2 billion last month, growing from $96.2 billion the month before.
Imports from the US dropped more than 18%, shrinking China’s trade surplus with the nation by 41.6% to $18 billion.
Meanwhile, Trump’s top trade officials are set to meet with their Chinese counterparts for negotiations in London on Monday.
It comes as tensions have reheated between the nations, with each accusing the other of breaching a temporary agreement reached in early May.
The White House has accused China of failing to fulfill a promise to resume rare earth shipments, while Beijing has torched the US’ export curbs on AI chips and its move to revoke Chinese student visas en masse.
Fueling widespread uncertainty is a decision from a federal trade court late last month to block the majority of Trump’s tariffs.
The Trump administration quickly filed an appeal and demanded the court place a stay on the order in the meantime, which was granted, keeping the tariffs in place for now.
