China’s Imports Plunge as U.S. Trade War Escalates, Exports Lose Steam

China’s imports unexpectedly shrank in the January-February period, while export growth slowed amid rising U.S. trade tensions. President Trump imposed an additional 10% tariff on Chinese goods, citing fentanyl concerns. This disrupted exporters’ efforts to front-load shipments ahead of restrictions. Production also slowed due to the Lunar New Year holiday. Analysts suggest China is cutting imports of key commodities like grains, iron ore, and crude oil to adjust reserves. Weak consumer and business confidence, worsened by a prolonged property crisis, further dampened economic activity. Imports fell 8.4% year-on-year, missing forecasts. Exports grew only 2.3%, well below December’s 10.7% rise. The trade surplus reached $170.52 billion.

CONTENT:

• Trump’s Tariffs Hit China as Trade War Escalates, Economic Woes Deepen

China’s Imports Plunge as U.S. Trade War Escalates, Exports Lose Steam

China’s imports saw an unexpected decline during the January-February period, while export growth also lost momentum, as escalating tariff pressures from the United States clouded the economic outlook for the world’s second-largest economy.

The renewed U.S.-China trade war intensified early in the year when U.S. President Donald Trump imposed an additional 10% tariff on Chinese goods, citing Beijing’s insufficient efforts to curb the flow of the opioid fentanyl. This move disrupted exporters’ attempts to expedite shipments ahead of the restrictions, while production also slowed due to the Lunar New Year holiday.

Analysts suggest the decline in imports indicates that Beijing is scaling back purchases of essential commodities in anticipation of prolonged trade tensions under Trump’s second term. Xu Tianchen, a senior economist at the Economist Intelligence Unit, noted that the drop in imports—particularly in grains, iron ore, and crude oil—may be linked to China’s strategy of adjusting its reserves. He added that iron ore imports, in particular, are being reduced due to excessive steel production exceeding economic demand.

Until now, exports had been a rare bright spot for an economy struggling with weak consumer and business confidence amid a prolonged property sector crisis. However, customs data released on Friday showed that imports fell 8.4% year-on-year, missing the predicted 1% increase from a Reuters economists’ poll and reversing December’s 1% growth. Meanwhile, exports grew by just 2.3% during the same period, falling short of the expected 5% rise and slowing sharply from December’s 10.7% gain.

Trump’s Tariffs Hit China as Trade War Escalates, Economic Woes Deepen

Just weeks into his second term, U.S. President Donald Trump has ramped up trade tensions by imposing broad tariffs on China, arguing that Beijing hasn’t done enough to curb fentanyl trafficking. This latest escalation is putting additional pressure on China’s already struggling economy, which has been heavily dependent on exports due to weak consumer spending and an ongoing property sector crisis.

Official data from China’s customs agency shows that exports grew by only 2.3% in January and February compared to the previous year—well below Bloomberg’s forecast of 5.9% and a sharp drop from the 10.7% growth recorded in December. Experts believe this slowdown could be due to fewer companies rushing to ship goods ahead of expected trade restrictions, a trend that had boosted exports in late 2024.

Trump’s tariffs, rolled out in two rounds of 10% increases in February and early March, are likely to take a more significant toll in the coming months. At the same time, China’s imports saw a steep decline of 8.4% during the first two months of the year, missing Bloomberg’s prediction of 1% growth. This drop suggests continued weakness in domestic demand and a possible reduction in purchases of foreign components used for manufacturing goods for export.

These economic concerns are surfacing just as China hosts its annual “Two Sessions” political meetings, where Premier Li Qiang set a national growth target of around 5% for 2025—the same as last year. However, with mounting economic challenges and the impact of the trade war still unfolding, many experts believe achieving this goal will be a tough task.