China’s U.S. exports tumble as tariffs escalate

[WORLD] China's exports to the United States experienced a significant downturn in April 2025, plummeting by 21% year-on-year. This sharp decline follows the implementation of new U.S. tariffs, reaching up to 145%, as part of President Donald Trump's trade policies. In response, China has retaliated with tariffs as high as 125% on American goods, intensifying the ongoing trade dispute between the two nations.

The latest measures mark a renewed escalation in a trade conflict that began during Trump’s first term in office, when similar tariffs were introduced on hundreds of billions of dollars’ worth of goods. While the initial phase of the trade war led to a temporary truce under the Phase One agreement in 2020, many of its commitments—such as increased Chinese purchases of U.S. agricultural and energy products—have fallen short. Analysts note that the revival of tariff hikes reflects growing bipartisan skepticism in Washington about China's trade practices, including state subsidies and intellectual property concerns.

Trade Volume Decline

The surge in U.S. tariffs has led to a notable decrease in trade volumes between the U.S. and China. Container shipping companies, such as Maersk, reported a 30% to 40% drop in cargo volumes between the two countries in April. This decline reflects swift reactions from businesses, including order cancellations and delays, as they await clarity from upcoming trade negotiations.

Businesses that rely on cross-Pacific supply chains are increasingly caught in a bind. U.S. retailers and manufacturers, already grappling with inflation and labor shortages, now face rising costs for imported materials and goods. Industry groups, including the National Retail Federation and U.S. Chamber of Commerce, have issued statements urging the White House to reassess the tariffs, warning of potential price hikes for consumers ahead of the holiday season. Similarly, Chinese exporters are exploring new logistics routes and pricing strategies to remain competitive in non-U.S. markets.

Diversification of Trade Partners

Despite the downturn in U.S.-China trade, China's overall exports rose by 8.1% in April. This growth is attributed to increased trade with other regions, including Southeast Asia, Africa, and Latin America. Notably, exports to Vietnam and Thailand surged by 18% and 20%, respectively, as global manufacturers seek to diversify their supply chains in response to trade tensions and previous disruptions caused by the COVID-19 pandemic.

This pivot aligns with China’s broader Belt and Road Initiative (BRI), which has invested heavily in infrastructure and trade linkages across Asia and Africa over the past decade. Experts suggest that BRI partner nations are now becoming more central to China's export strategy, allowing Beijing to cushion the impact of reduced access to the American market. However, economists caution that these emerging markets may not be able to fully absorb the export volume lost from the U.S. in the short term.

Economic Implications for China

The escalating trade war poses challenges for China's economic stability. Economists at Goldman Sachs estimate that the additional 10% U.S. tariffs could reduce China's GDP growth by 0.5 percentage points in 2025. UBS forecasts a growth rate of 4%, down from previous projections, as the country grapples with weakened external demand and domestic economic pressures.

In an attempt to counteract these headwinds, Chinese policymakers are weighing additional monetary and fiscal measures to stimulate the domestic economy. The People’s Bank of China is reportedly considering a further reduction in the reserve requirement ratio to boost lending. At the same time, local governments have been tasked with accelerating infrastructure projects to maintain employment and industrial output. However, with mounting local debt and a fragile property sector, the scope for large-scale stimulus may be limited.

Global Trade Dynamics

The U.S.-China trade tensions are influencing global trade patterns. While trade volumes between the two nations decline, other regions are experiencing growth. The European Union's stock markets have shown optimism, with Germany's DAX index reaching a record high, driven by expectations of new trade agreements and fiscal stimulus measures.

The sharp decline in China's exports to the U.S. underscores the significant impact of escalating tariffs on global trade dynamics. As both nations navigate the complexities of this trade dispute, the broader economic implications remain to be fully seen, with potential shifts in global supply chains and trade alliances.