China's Export Struggles Amid U.S. Tariffs

China's export growth in May slowed sharply due to U.S. tariffs, while the country's factory-gate deflation reached its lowest level in two years. Despite reduced tariffs, exports to the U.S. dropped significantly, underscoring ongoing trade tensions. Imports also fell, adding to domestic economic pressures despite recent stimulus efforts.

In May, China's export growth dipped to its lowest in three months as U.S. tariffs exacerbated economic pressures, placing the world's second-largest economy in a precarious position. This development follows U.S. President Donald Trump's global trade war, which has had a tumultuous impact on Sino-U.S. trade relations, affecting global economic momentum.

China's exports to the U.S. plunged 34.5% year-on-year, marking the steepest decline since the COVID-19 outbreak in early 2020. While total exports increased by 4.8% year-on-year, customs data revealed the growth fell short of expectations, despite a recent reduction in U.S. tariffs on Chinese goods.

Imports dropped as well, highlighting weak domestic demand. Businesses are responding to ongoing deflationary pressures, with some, like Starbucks, adjusting prices to appeal to cost-conscious consumers. Meanwhile, trade negotiations between the U.S. and China continue, aiming to address prolonged economic uncertainties.