China’s exports to the US saw a substantial rise of 33% in August, largely driven by new markets as the European Union and other partners joined in. This shift resulted in an overall export growth of 4.4%, particularly as China sought alternatives amidst President Trump’s attempts to sidestep tariffs.
Even though this marked the slowest growth since February, it’s clear that China is adapting by exploring different markets instead of facing hefty tariffs, which can reach up to 55% on its products.
Zhiwei Zhang, head of PinPoint Asset Management, commented on this trend, noting, “Chinese exporters are pursuing greater market share overseas, especially given the weak domestic demand.” He also suggested that this “go abroad” initiative has helped maintain China’s export resilience this year.
Shipments to the EU, the Association of Southeast Asian Nations, and African nations surged by 10.4%, 22.5%, and nearly 26% in August, respectively. When looking at the overall picture until August, US-bound exports from China outpaced last year’s figures by 15.5%, while imports dropped by 11%.
In that same timeframe, exports to the EU, ASEAN, Africa, and Latin America also rose, with increases of 7.7%, 14.6%, 24.6%, and almost 6%. The US remains the largest trading partner for China, accounting for $283 billion in Chinese goods as of August. In contrast, exports to the entire EU reached $541 billion during this period.
However, Zichun Huang, an economist with Capital Economics, cautioned that exports might come under pressure soon due to the US-China trade ceasefire and rising tariffs on goods rerouted through other countries. Imports from the US also dropped by 16% in August compared to the previous year.
China’s overall imports increased by 1.3% year-on-year, but this growth is still considered modest. Expectations had pointed to a 3% rise, which feels somewhat unrealistic given the ongoing pandemic, real estate challenges, job-market concerns, and deflationary pressures.
Many exporters have been smartly routing their cargo to third countries to dodge hefty tariffs, but this has come under scrutiny. Trump has intensified enforcement against these transport methods and announced a 40% tax on such shipments. Additionally, he ended the De Minimis exemption, a long-standing rule that allowed packages under $800 to avoid import taxes.
Following Trump’s executive order in July, which eliminated import tax exemptions, postal traffic to the US plummeted over 80%, according to the United Nations Post Office. Some postal services are finding it tough or even impossible to collect these duties, leading to what they describe as “major operational disruptions.”
In fact, 88 postal operators have reported suspending some or all services to the US until a resolution is found. The overall traffic from nearly 192 member states dropped by 81% on August 29, the day the new regulations took effect as compared to the prior week.
The UPU has started implementing measures to assist postal operators globally in calculating and collecting these import taxes. Before the rules changed, the Postal Coalition had expressed concern to Secretary of State Marco Rubio about the lack of time and guidance for compliance with these new regulations.
