U.S. Market Collapsing For China
As Americans and Chinese officials scrambled to forge new politically acceptable trade terms, China reported a pandemic-level decline in exports to the U.S.
Chinese shipments to the U.S. fell 34.4% year-on-year in May to $28.8 billion, the steepest drop since Covid-19 upended global trade in February 2020. Chinese imports from the U.S. fell 17.9% to $10.8 billion, suggesting that the world’s richest trading relationship is collapsing.
The question is how much the two countries can sustain trade despite escalating tensions. Last week, President Trump called his phone call with Chinese president Xi Jinping “very good” with a “very positive conclusion for both countries.”
Overall, Chinese exports increased 4.8% year-on-year to $316.1 billion, and imports dropped 3.4% to $212.9 billion.
China Reconfigures Exports Markets
The global trading system is going through its biggest reconfiguration since China’s accession to the World Trade Organization in 2001 launched its historic export boom.
With the U.S. market drying up for them, manufacturers based in China are faced with a decision: Leave or sell somewhere else.
A lot of the reporting has focused on factories relocating to places like Vietnam or Mexico, but many firms are finding new markets.
In May, Chinese exports to 11 different trading partners increased at least 10% year-on-year: Germany, France, Vietnam, Thailand, Singapore, Indonesia, Australia, India, the UK, Canada, and South Africa.
The EU has many of the same protectionist politics as the U.S., but it’s still more open to China. Exports to France, up 24.2% to $4.6 billion, and Germany, up 21.7% to $10.5 billion, were especially striking. Overall sales to the EU rise 12.1% to $49.5 billion. Imports from the EU were flat at $22.9 billion.
There were other big jumps to appealing markets. Exports to Canada rose 20.4% to $4.7 billion. Exports to continental Africa rose 33.5% to $19.5 billion. Shipments to ASEAN nations, including Thailand, Malaysia and Thailand, rose 15.2% to $58.4 billion.
Shipments to Russia, whose economy has raced recent setbacks, dropped 10.7% to $8.1 billion.
Smartphone Exports Plummet Further
The protectionist wave in the U.S. has hurt one consumer goods category more than others: smartphones. Chinese exports of smartphones declined 22.8% in value to $6.9 billion. They fell 9.9% in numbers to 55.3 million handsets.
The Chinese government has been delaying granting export licenses for shipping rare earths and other elements essential for making batteries, high-tech goods, and weapons. Rare earths shipments in May plunged 47.5% to $19 million. The paradox of rare earths is that companies need only incremental amounts, so it’s a tiny market by dollar terms.
Overall Chinese, high-tech exports increased 5.1% to $74.3 billion. The bigger increases have been in industrial production, notably cars and ships. Exports of motor vehicles rose 13.7% in May to $12 billion, and sales of ships increased 44% to $4.2 billion.
China Ratchets Up Soybean Purchases
China, the world’s biggest buyer of soybeans, increased its purchases to a record high in May. Chinese negotiators know they have leverage with soybeans imports from the U.S., and Beijing’s been cutting off its buying. In the first four months of 2025, U.S. soybean exports to China dropped 51.3% to $2.4 billion. In May, however, China increased its purchases of soybeans 36.2% to 13.9 million tons, snapping up cargo from Brazil, according to news reports. By value, those imports rose 22.6% to $6.1 billion. Imports from Brazil, the world’s top soybean exporter, increased 9.6% to $11.3 billion.
Overall, imports of agricultural products rose 0.8% to $19.9 billion. China’s role in high-tech supply chains might be less geared toward the U.S. than it was at the start of the decade, but it’s not faltering. Imports of high-tech products rose 11.4% to $65.8 billion. Purchases of integrated circuits rose 8.9% to $33.7 billion.
However, there are signs that China’s domestic economy might still be facing challenges. In May, imports of crude petroleum, iron ore, and coal, all fell.
John W. Miller