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AsianFin -- China's exports to the United States fell by more than a third in May, posting their steepest drop since the early months of the pandemic, as trade tensions between the world's two largest economies weighed heavily on bilateral commerce.
Exports to the U.S. plummeted 34.5% year-on-year, the sharpest decline since February 2020 when COVID-19 first disrupted global supply chains, according to Wind Information. Imports from the U.S. also declined, falling 18.1%, narrowing China's trade surplus with the U.S. by 41.5% to $18 billion.
While China's overall exports rose 4.8% in U.S. dollar terms last month, they came in just shy of economists' expectations for a 5% gain, according to Reuters. Imports, however, sank 3.4%—a far steeper decline than the 0.9% drop forecast, highlighting ongoing weakness in domestic demand.
Shipments to Southeast Asia helped offset some of the drag, rising nearly 15% from a year earlier. Exports to the European Union grew 12%, while those to Africa surged more than 33%.
China's total trade surplus swelled 25% to $103.2 billion in May.
The May figures mark a slowdown from April, when China's exports rose 8.1%, buoyed by robust demand from Southeast Asia. But in both months, exports to the U.S. took a hit: outbound shipments to the U.S. fell more than 21% in April as steep tariffs took effect.
The prohibitive tariffs were only lifted in mid-May, but by then the damage was already done, said Tianchen Xu, senior economist at the Economist Intelligence Unit.
Rare earth exports fell 5.7% year-on-year to 5,865.6 metric tons, as Beijing tightened export controls to gain leverage in trade negotiations with Washington. Meanwhile, car and ship exports rose 22% and 5%, respectively, while exports of smartphones and home appliances fell 10% and 6%.
On the import side, soybean shipments hit a record high of 13.92 million metric tons in May, up 36.2% from a year earlier.
Analysts expect some recovery in U.S.-bound exports beginning in June, the first full month after Washington and Beijing agreed to scale back punitive trade measures.
Xu said shipments of rare earths and electric machinery could rebound following Beijing's easing of export controls. U.S. President Donald Trump's 145% tariff hike on Chinese goods, which took effect in April, had triggered retaliation from Beijing, including triple-digit duties and restrictions on critical mineral exports.
A preliminary agreement reached in Geneva last month saw both sides agree to roll back most tariffs. U.S. tariffs on Chinese goods now stand at 51.1%, while China's duties on U.S. products are at 32.6%, according to the Peterson Institute for International Economics.
Zichun Huang, China economist at Capital Economics, noted early signs of improving U.S. demand for Chinese goods post-Geneva, but cautioned that the path forward remains uncertain. "It takes time for recovering demand to translate into shipments, and with many tariffs still in place, we're likely to see slower export growth toward year-end," he said.
Further negotiations are set to resume, with Chinese Vice Premier He Lifeng scheduled to meet U.S. Treasury Secretary Scott Bessent in London later Monday for a second round of talks.
Tensions remain high despite the truce. Washington has accused Beijing of delaying approvals for key mineral exports, while China has condemned new U.S. restrictions on student visas and chip exports.
On Saturday, China's Ministry of Commerce said it would continue to process export licenses for rare earths, citing growing demand from the robotics and new energy vehicle sectors.
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