China’s exports to US plunge 21% amid Trump’s tariff surge, as trade realigns toward global south

China’s exports to US plunge 21% amid Trump’s tariff surge

China’s exports to the US collapsed by 21% in April, marking the steepest decline in years, as President Donald Trump’s aggressive new tariff regime forces Chinese manufacturers to reroute goods and reconfigure global supply chains, the Wall Street Journal reported.

The stark drop in US-bound shipments comes despite China’s overall exports rising by 8.1% year-on-year, outpacing economists’ expectations. But behind the headline number is a dramatic shift: exports to Southeast Asia surged 21%, while those to Latin America and Africa jumped 17% and 25% respectively. Sales to the European Union also rose 8.3%, signalling a major recalibration of China’s trade strategy in response to Washington’s restrictions.

Tariffs reshape China’s trade

The dramatic drop in exports to the US follows Trump’s cumulative 145% tariff hike on Chinese imports, rolled out in a series of actions since April. That includes sweeping 125% tariffs on all Chinese goods and additional penalties for Beijing’s role in fentanyl trafficking. Electronics like smartphones were later exempted.

In retaliation, China slapped its own 125% tariff on US products. The resulting trade standoff has led to what some in the White House call a near “total trade embargo” between the world’s two largest economies.

Chinese exporters had briefly rushed to fulfil US orders in March ahead of the tariff hike, with shipments that month up 9.1% from the previous year. But with April’s plunge, the cumulative drop in US-bound exports for the first four months of the year now stands at 2.5%.

Southeast Asia emerges as key alternative

Manufacturers are shifting production to nations benefiting from the US’s current 90-day tariff pause — particularly Vietnam, Indonesia, and Thailand, where Chinese exports soared 23%, 37%, and 28% respectively.

Toy maker Dongguan City Jiaheng Toys, whose US-bound orders from China have more than halved, is accelerating construction of a larger factory in Vietnam. Similarly, Sanmei Group, a Chinese maker of home décor, says nearly all US orders have been suspended unless they relocate production to Vietnam — a move the company is now executing.“It prompted us to speed up our operation,” said Cora Lei of Sanmei.

Growth outlook dims despite export resilience

April’s overall export performance beat expectations (8.1% vs. 2.5% forecast), but underlying signals are weakening. A key gauge of new export orders fell to its lowest since 2022, and Goldman Sachs now projects a 5% decline in Chinese exports for the year. That forecast, if realized, could undermine China’s GDP growth goal of “about 5%,” as exports accounted for roughly one-third of growth in 2023.

Economists increasingly believe GDP growth could fall below 4%, especially if the US-China tariff standoff drags on. The hit to export-related jobs is also significant: Goldman Sachs estimates 16 million Chinese workers are involved in producing goods for the US

In response, Beijing this week announced its first major stimulus move since the April tariffs — cutting interest rates and injecting liquidity into the financial system. Officials say further economic support is planned.

Diplomatic thaw opens trade talks

Despite months of rising tension, both nations are expected to hold high-level talks in Switzerland this weekend. Officials from both sides, including US Treasury Secretary Scott Bessent and China’s Vice-Premier He Lifeng, have framed the meeting as a step toward de-escalating a crisis that has disrupted global trade flows.

China’s decision to reopen dialogue with Washington over fentanyl controls reportedly helped pave the way for the talks.