^{Photo: South China Morning Post}

China’s Exports to the U.S. Plunge Over 34% in May Amid Trade Tensions and Tariff Fallout

China’s trade data for May revealed a jarring collapse in exports to the United States, with a 34.5% year-over-year plunge — the most severe decline since the early days of the COVID-19 pandemic in February 2020. Analysts are pointing to lingering tariff pressures, weakened American demand, and a volatile diplomatic climate as key culprits behind the dramatic downturn.

Key Data Highlights

• China’s overall exports rose 4.8% in May (YoY) in U.S. dollar terms, falling short of the 5% increase forecasted by economists in a Reuters poll.
• U.S.-bound exports dropped 34.5%, while imports from the U.S. also declined over 18%.
• China’s trade surplus with the U.S. narrowed by 41.55%, down to $18 billion in May.
• Total imports fell 3.4%, significantly more than the 0.9% drop economists had anticipated, underscoring weak domestic consumption.

U.S. Tariffs and Diplomatic Fallout Weigh Heavily

The dramatic decline in Chinese exports to the U.S. follows the imposition of steep tariffs by the Trump administration earlier this year, including a 145% duty on Chinese goods in April. Though the two nations agreed to scale back the majority of tariffs in a Geneva meeting last month — reducing U.S. levies to 51.1% and China’s to 32.6% — the damage from April and early May had already impacted trade flows.

According to Tianchen Xu, a senior economist at the Economist Intelligence Unit, “The prohibitive tariffs were only lifted in mid-May. By that time, orders had already slowed down significantly, and exporters had limited time to adjust.”

Sectoral Breakdown: Winners and Losers

Despite the overall slump in exports to the U.S., China saw notable shifts across industries and geographies:

Exports Down:

• Rare earths: Down 5.7% YoY to 5,865.6 tons, reflecting China’s tightening controls to strengthen its bargaining power in trade negotiations.
• Smartphones: Fell nearly 10%
• Home appliances: Dropped around 6%

Exports Up:

• Cars: Increased 22%
• Ships: Rose nearly 5%
• Exports to Southeast Asia: Up 15%
• Exports to the EU: Climbed 12%
• Exports to Africa: Surged over 33%

Record Soybean Imports and Shifting Trade Routes

China’s imports of soybeans reached a historic monthly high of 13.92 million metric tons, a 36.2% increase YoY, as domestic demand in agriculture surged. Meanwhile, Beijing appears to be diversifying its trade routes and partners, bolstering exports to the ASEAN bloc, Africa, and the European Union.

China’s overall trade surplus in May jumped 25% YoY to $103.2 billion, driven primarily by reduced imports and strong export performance outside the U.S. market.

Looking Ahead: June and Beyond

With the second round of trade talks set to take place in London between Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent, analysts are cautiously optimistic about a near-term rebound. Xu suggests that June could show the first full-month effect of the lifted tariffs, particularly for sectors like electric machinery and critical minerals.

However, Zichun Huang of Capital Economics warns, “The current level of tariffs may become the new normal. Unless further reductions are negotiated, we should expect muted export growth through the rest of the year.”

Geneva Deal Fragile Amid New Accusations

The U.S. has accused China of dragging its feet on rare earth exports, while China has criticized Washington’s fresh visa curbs on Chinese students and new semiconductor export controls. These flashpoints continue to threaten the fragile Geneva agreement.

China’s Ministry of Commerce reaffirmed on Saturday that it would continue reviewing export applications for rare earths, citing their increasing demand in high-tech sectors such as robotics and new energy vehicles.

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While China managed a modest overall export gain in May, the collapse in trade with the U.S. highlights the enduring weight of political tensions and tariff barriers. All eyes are now on the London talks, where negotiators from both superpowers hope to patch the cracks in their fragile economic truce.