China’s exports to the United States dropped sharply by 34.4% year‑on‑year in May 2025—marking the most significant decline since February 2020
Context: Trade Friction Amid Temporary Truce
- The U.S. and China agreed to a 90‑day tariff truce in mid‑May to allow cooling-off and trade negotiations.
- Despite the pause, exports to the U.S. plunged over 34%, while overall exports still rose 4.8% to $316 billion
- Exports to Southeast Asia and the EU showed resilience—growing nearly 15% and 12% respectively
Drivers of the Export Decline
- Tariff Remnants: Although tariffs were temporarily reduced, many duties remained in effect—suppressing U.S.-bound demand
- Post‑Build Stock Dip: Companies heavily stocked up before price hikes, leading to a demand drop once tariffs were implemented .
- Deflation + Weak Domestic Market: Persistent factory‑gate deflation (‑3.3%) and slowing domestic demand limited production exports
Implications for Trade Talks
- The steep drop in U.S. exports increases urgency in ongoing London trade discussions, where rare‑earth exports and tariff reductions are top priorities
- Both nations aim to negotiate durable solutions before the truce lapses—an extended disruption could further destabilize global supply chains.
Looking Ahead: Will June Be Better?
Analysts expect a modest rebound in June, supported by the tariff truce, but long-term recovery depends on resolving structural trade tensions bloomberg.com
Final Takeaway
China’s sharp 34.4% drop in exports to the U.S. despite a temporary tariff halt highlights the deep strain in bilateral trade. With overall exports holding steady and markets eyeing upcoming negotiations, outcomes from London could determine whether the slowdown is a short-term snag or a sign of deeper decoupling.