Chinese exports to US plunge as tariffs bite

Irish Times

a day ago

China's
export growth slowed to a three-month low in May as US
tariffs
slammed shipments, while factory-gate deflation deepened to its worst level in two years, heaping pressure on the world's second-largest economy on both the domestic and external fronts.
US President
Donald Trump's
global trade war and the swings in China-US trade ties have in the past two months sent Chinese exporters, along with their business partners across the Pacific, on a roller-coaster ride and hobbled world growth.
Underscoring the US tariff impact on shipments, customs data showed that China's exports to the US plunged 34.5 per cent year-on-year in May in value terms, the sharpest drop since February 2020, when the outbreak of the Covid-19 pandemic upended global trade.
Total exports from the Asian economic giant expanded 4.8 per cent year-on-year in value terms last month, slowing from the 8.1 per cent jump in April and missing the 5 per cent growth expected in a Reuters poll, customs data showed on Monday, despite a lowering of US tariffs on Chinese goods which had taken effect in early April.
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'It's likely that the May data continued to be weighed down by the peak tariff period,' said Lynn Song, chief economist for Greater China at ING.
Song said there was still front-loading of shipments due to the tariff risks, while acceleration of sales to regions other than the United States helped to underpin China's exports.
Imports dropped 3.4 per cent year-on-year, deepening from the 0.2 per cent decline in April and worse than the 0.9 per cent downturn expected in the Reuters poll.
Exports had surged 12.4 per cent year-on-year and 8.1 per cent in March and April, respectively, as factories rushed shipments to the US and other overseas manufacturers to avoid Trump's hefty levies on China and the rest of the world.
While exporters in China found some respite in May as Beijing and Washington agreed to suspend most of their levies for 90 days, tensions between the world's two largest economies remain high and negotiations are under way over issues ranging from China's rare earths controls to Taiwan.
Trade representatives from China and the US are meeting in London on Monday to resume talks after a phone call between their top leaders on Thursday.
China's imports from the US also lost further ground, dropping 18.1 per cent from a 13.8 per cent slide in April.
Zichun Huang, economist at Capital Economics, expects the slowdown in exports growth to 'partially reverse this month, as it reflects the drop in US orders before the trade truce,' but cautions that shipments will be knocked again by year-end due to elevated tariff levels.
China's exports of rare earths jumped sharply in May despite export restrictions on certain types of rare earth products causing plant closures across the global auto supply chain.
The latest figures do not distinguish between the 17 rare earth elements and related products, some of which are not subject to restrictions. A clearer picture of the impact of the curbs on exports will only be available when more detailed data is released on June 20.
China's May trade surplus came in at $103.22 billion (€90 billion), up from the $96.18 billion the previous month.
Other data, also released on Monday, showed China's imports of crude oil, coal, and iron ore dropped last month, underlining the fragility of domestic demand at a time of rising external headwinds.
Beijing in May rolled out a series of monetary stimulus measures, including cuts to benchmark lending rates and a low-cost loan program, aimed at cushioning the trade war's blow to the economy. – Reuters
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