In April, China’s exports jumped by the largest percentage in many years. Collectively, they hit double digits in U.S. dollar terms with a stunning 8.1% rise over last year. The push was a surprise, too — analysts had projected just a 1.9% increase, according to a Reuters poll. Even as export figures look rosy on the whole, shipments to the US plummeted by more than 21% from a year ago. This represents a historic drop caused by increasing trade uncertainty.
In March, China announced a record-shattering 12.4% increase in exports. This boom in trade happened right before the United States slapped on a new round of tariffs. Last month’s blow came when fresh tariffs hit with an astonishing 145% on everything coming from China. In particular, exporters have been left scrambling to get their shipments out faster and avoid those high costs. The entire supply chain center of gravity laid bare the urgency to ship goods when container vessel traffic from China to the U.S. plummeted. This decline was most prominent during the last week of April.
The trade relationship between China and the U.S. has been tumultuous over the last few years, with retaliatory tariffs sowing even more discord. In retaliation, China immediately retaliated with 125% tariffs on American products. This ping-ponging has had a direct and negative effect on exports. April was no exception, with China’s imports from the U.S. plunging almost 14% over the same month last year.
Those big numbers aren’t the whole story. China’s import figures paint a complicated picture of its economic malaise. Although imports reduced their year-on-year declines as Beijing ramped up stimulus efforts, they nevertheless dropped by 4.3% from last year. In fact, imports dropped by a significant 0.2% in the month of April alone, signaling continuing weakness in the domestic economy.
That steep drop in the shipments to the U.S. warrants serious alarm. This troubling trend would have disastrous long-term repercussions for China’s international economic relationships and domestic financial stability. Chinese exporters will have a very hard time growing under these circumstances. Protective tariffs and changing global market conditions have made their efforts significantly more complicated. With the US-China trade war far from over, companies across the globe are pivoting to adapt to changing policies.