Last year, China recorded a record-breaking trade surplus, with exports up 5.9% and imports up 1.1% year-over-year.
When Trump announced high tariffs on China, it raised concerns about whether the world’s largest trade country would fare up. But, it was quite a surprising turnaround.
China’s exports have already hit a record this year as rising US tariffs and more threats have prompted China to frontload shipments.
On February 4, the United States imposed a 10% tax on nearly all Chinese imports and then increased that to 20% earlier this week.
The General Administration of Customs reported that sales abroad increased 2.3% in the first two months of the year to $540 billion. Imports have the inverse effect. It unexpectedly dropped 8.4%, leaving a record trade surplus of around $171 billion.
The median of economists’ predictions was that imports would increase by 1% and exports would increase by 5.9%.
Last year, China recorded a record-breaking trade surplus, with exports up 5.9% and imports up 1.1% year-over-year. According to Goldman Sachs research, it was the highest surplus recorded by any country in history and represented 5.2% of China’s nominal gross domestic product.
However, the spike in its exports has led many countries to implement protectionist policies. US President Donald Trump has taken the biggest step of imposing 20% additional charges on Chinese imports, with the first 10% going into effect in February and the remaining on Tuesday. He has also threatened to impose 25% tariffs on pharmaceuticals, automobiles, and microchips imports.
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said the damage from higher US tariffs on Chinese exports would probably show up in the next month. While the tech industry in China is flourishing, domestic demand is still low since the real estate market is still in decline.
Exports have been a key driver of China’s economy in recent years, which have helped to offset its sluggish domestic consumption. Chinese companies have quickly increased their global e-commerce in products, including lithium batteries and electric cars.
China’s exports to the United States increased by 2.3% year-on-year in the first two months, compared to the 15.6% growth in December and the 5% surge during the same period in 2024.
It exported over 97.1 million cars in January and February, a 16.8% year-on-year increase, despite a 2.5% increase in export value to US$16.14 billion. The unit price of exported cars decreased by 12.3%. It also sold 892 ships for US$6.95 billion, a 0.7% decrease in volume but a 2.2% increase in value.
Shipments to China’s biggest economic partner, the Association of Southeast Asian Nations, increased by 5.7%.
Shipbuilding exports were a bright spot in China’s trade last year due to the Red Sea shipping crisis and the renewal of global fleets. However, Trump wants to threaten them by increasing the port fees on Chinese-made vessels.
Julian Evans-Pritchard, head at Capital Economics stated that the current drop in exports cannot be directly attributed to US tariffs since the share of exports going to the US remains the same as before Trump’s re-election.
Gary Ng, senior economist at Natixis, stated that these muted trade numbers might be the start of the prolonged decline.
He stated that if Trump decides to impose tariffs solely on China and not on other countries, it is possible to see a quicker decoupling from the US. Trump is slowly targeting China, meaning trade rerouting through third countries like Vietnam and Mexico will also be at risk. China’s exports may suffer as a result.
Commerce Minister Wang Wentao said on Thursday that China is determined to protect its interest, warning that there will be no winners in a trade war.