China’s Exports to U.S. Plunge 34.5% in May Despite Trade Truce; Signs of Recovery Seen in June
China’s exports in May posted weaker-than-expected growth, dragged down by a sharp collapse in trade with the United States, even as both countries agreed to ease tariffs in a preliminary deal struck last month. Analysts believe the full impact of the trade thaw will only become visible in June's data.
According to customs data released on Monday, China's exports rose 4.8% year-on-year in May, falling short of Reuters’ forecast of a 5% increase. Meanwhile, imports dropped 3.4%, significantly worse than the expected 0.9% decline, highlighting persistent domestic demand weakness.
Exports to U.S. See Steepest Drop Since Pandemic
China’s exports to the United States plunged 34.5% from a year earlier, marking the sharpest decline since February 2020, when global trade was disrupted by the Covid-19 outbreak. Imports from the U.S. also fell by over 18%, shrinking China’s trade surplus with America by 41.55% to $18 billion.
This comes despite the Beijing-Washington truce signed in Geneva in May, which rolled back several tariffs. However, much of May’s data still reflects the impact of the heavy 145% U.S. tariffs imposed in April before the deal came into force.
“The prohibitive tariffs were only lifted in mid-May—by then, the damage was already done,” said Tianchen Xu, Senior Economist at the Economist Intelligence Unit. “June will be the first full month of relief.”
Diversification to Southeast Asia, Europe, Africa
While trade with the U.S. deteriorated, China expanded its exports elsewhere:
- Shipments to the Southeast Asian bloc surged nearly 15%
- Exports to the European Union rose 12%
- Exports to Africa jumped more than 33%
Thanks to these gains, China’s overall trade surplus swelled by 25% year-on-year to $103.2 billion in May.
Sector Trends: Rare Earths Drop, Soybeans and Cars Surge
Among product categories:
- Rare earth exports fell 5.7%, as Beijing tightened controls on the export of these critical minerals—often used as a bargaining chip in trade talks.
- Smartphone exports declined 10%, and home appliances dropped 6%
- Car exports jumped 22%, and ship exports rose 5%
- Soybean imports soared 36.2%, hitting a record high of 13.92 million metric tons
The rare earths pullback aligns with China’s efforts to assert strategic control over materials crucial for electronics, robotics, and electric vehicles.
High-Stakes Trade Talks Continue
Following the May Geneva agreement, U.S. tariffs on Chinese goods now stand at 51.1%, while China’s tariffs on American imports have been lowered to 32.6%, according to the Peterson Institute for International Economics.
But tensions remain. As second-round talks get underway in London today, Chinese Vice Premier He Lifeng is set to meet U.S. Treasury Secretary Scott Bessent. Both sides have accused the other of violating the Geneva deal:
- Washington says Beijing has slow-walked approvals for critical mineral exports.
- Beijing criticizes the U.S. for tightening student visa policies and imposing new chip export restrictions.
“We’re seeing early signs of U.S. demand picking up after the truce,” said Zichun Huang, China economist at Capital Economics. “But if current tariffs remain, export growth will slow again by year-end.”
Outlook for June and Beyond
Experts predict that June trade data will show a rebound in U.S.-bound shipments, especially in electric machinery and rare earths, as tariff relief takes full effect.
Still, the broader picture remains clouded by geopolitical uncertainty and mutual distrust. Any further flare-up over technology, education, or strategic commodities could unravel the fragile gains of the Geneva truce.
Summary Table: Key May 2025 China Trade Data
| Metric | Value/Change |
|---|---|
| Overall Export Growth | +4.8% YoY |
| Exports to U.S. | -34.5% YoY (lowest since Feb 2020) |
| Imports from U.S. | -18% YoY |
| Trade Surplus with U.S. | $18 billion (-41.55% YoY) |
| Rare Earth Exports | -5.7% |
| Smartphone Exports | -10% |
| Car Exports | +22% |
| Soybean Imports | +36.2% (record high) |
| Total Trade Surplus | $103.2 billion (+25% YoY) |
The sharp drop in U.S.-bound exports shows the lingering damage from earlier tariffs, even as diplomatic efforts aim to mend trade ties. China’s ability to diversify its export markets and the outcome of ongoing high-level talks in London will determine whether the recent slowdown is a short-term shock—or the start of a longer, more strategic economic shift.