China's exports surge driven by U.S. tariff reprieve

In June 2025, China's exports experienced a significant acceleration, increasing by 5.8% from the previous year. This growth was attributed to a temporary reprieve on tariffs set by the United States, which prompted many companies and consumers to place orders ahead of an impending deadline in August. The surge in exports was particularly notable as it followed a 4.8% increase recorded in May. Additionally, imports showed a small recovery, growing by 1.1%, marking the first increase for the year according to data released by China's customs authorities on July 14, 2025. However, despite the positive data, exports to the USA still fell by 16%, although this was a significant improvement from the 34.5% decline seen in May. The previous tariffs imposed by U.S. President Donald Trump had severely disrupted trade, with rates reaching as high as 245%. Nevertheless, the truce agreed upon allowed some companies to resume importing goods such as shoes and clothes, which they had previously paused due to the high tariffs. There remains a pressing uncertainty for businesses amidst ongoing negotiations between the two countries, which have yet to produce meaningful policies. While this upturn in trade offers some hope for boosting economic growth in the second quarter of 2025, experts warn about potential slowing in the future. Analysing the situation, Zichun Huang from Capital Economics has noted that while the immediate outlook appears positive, high tariffs are expected to endure, limiting the ability of Chinese manufacturers to maintain competitive pricing and potentially impacting their global market share. In the broader context, China's total trade, combining both exports and imports, achieved a record volume exceeding 20 trillion yuan, or approximately $2.8 trillion, for the first half of the year. The surplus in trade registered at a noteworthy $586 billion, showing that even amidst the tensions with the U.S., China's global trade has shown resilience. Exports to regions such as Southeast Asia and Europe indicated strong growth, highlighting China's efforts to diversify its markets, although certain sectors, such as auto exports to Europe, faced setbacks due to new tariffs on electric vehicles. This situation paints a mixed picture of China's current trade performance, underscoring opportunities and challenges. The expectation for slower growth in exports poses a concern for China's overall economic performance in the latter part of the year, as heightened tariffs continue to loom and international market dynamics become increasingly complex. Businesses will need to navigate these evolving conditions carefully, balancing short-term gains against potential long-term challenges brought on by continuing trade tensions and external dependencies.