Trade War : Chinese Exports to the U.S. Plunge 12.7% in May

Trade tensions between China and the United States continue to weigh heavily on bilateral exchanges, as reflected in the latest figures released by Chinese customs authorities.

In May 2025, China’s exports to the United States fell by 12.7%, underscoring the direct impact of tariff hikes imposed by the Trump administration.

According to statistics released on Monday, overall Chinese exports across all markets rose by just 4.8% year-on-year, significantly below the 6% growth forecast by economists surveyed by Bloomberg.

This disappointing performance highlights a clear slowdown in China’s foreign trade, particularly with the U.S., its most affected trading partner.

In monetary terms, exports to the U.S. declined from $33 billion in April to $28.8 billion in May—a drop of $4.2 billion in a single month (approximately €3.7 billion).

The tariff increases imposed as part of Donald Trump’s standoff with Beijing appear to be having a tangible impact on trans-Pacific trade flows.

A Challenging Economic Recovery in China

This sharp drop in exports comes amid already mounting economic pressures in China.

The country is grappling with persistent deflationary pressure driven by sluggish household consumption, a prolonged real estate crisis, and high youth unemployment.

In May, the Consumer Price Index (CPI) declined by 0.1% year-on-year, marking a fourth consecutive monthly drop.

While this decline is in line with April’s result, it confirms that China has entered a deflationary phase. Analysts are concerned: sustained price decreases tend to encourage consumers to delay purchases, which in turn dampens domestic demand and industrial activity.

The outlook is even bleaker when it comes to producer prices, which fell by 3.3% in May compared to the previous year, following a 2.7% drop in April.

This continued decline in factory-gate prices is squeezing industrial profit margins and further exposes the fragility of China’s manufacturing sector.

Modest Rebalancing with Other Trade Partners

Not all markets are in retreat, however. Exports to Vietnam, for instance, rose slightly to reach $17.3 billion in May, indicating a partial strategic pivot by China toward other Asian partners.

“The trade war between China and the United States has led to a steep decline in exports to the U.S., but this drop has been partially offset by a rise in exports to other countries,” noted Zhiwei Zhang, an economist at Pinpoint Asset Management, in a briefing published Monday.

Still, he warned that the outlook remains “highly uncertain,” especially due to the waning effect of front-loaded orders. Earlier, some foreign buyers had rushed purchases to avoid the risk of future tariff increases.

U.S.-China Talks in London: A Fragile Hope

Against this backdrop of economic strain, a new round of trade talks between Chinese and American delegations is set to begin this Monday in London, following an initial meeting in Geneva last month.

The U.S. delegation is led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer.

On the Chinese side, Vice Premier He Lifeng will head the negotiations.

Both parties hope to extend the current trade truce and initiate dialogue on the mutual reduction of tariffs. These discussions come on the heels of a phone call between Donald Trump and Xi Jinping last Thursday, which the U.S. president described as “very positive.”

China thus finds itself navigating a period of significant economic turbulence—marked by declining exports, entrenched deflation, and prolonged trade tensions.

While the London negotiations may offer a path toward de-escalation, the trade war initiated by Washington continues to weigh on the global economy.

The coming months will be critical for the world’s second-largest economy.