Before the Tariffs Hit: How China Shifted Production and Exports to Stay Ahead

China’s late-2024 export surge to the US was a deliberate, well-planned effort by Chinese firms to ship goods ahead of new tariffs, supported by temporary production ramp-ups and the diversion of exports from other markets. When tariffs hit, China cushioned the impact by shifting production and exports toward Southeast Asia and redirecting goods to third countries rather than cutting trade outright.

In the final months of 2024, as the United States prepared new tariff hikes on Chinese goods, trade data told an unexpected story. Instead of slowing down, China’s exports to the US surged. By December, shipments were more than 15 percent higher than a year earlier, far above normal growth trends. A new study from the International Monetary Fund’s Research Department, based on data from China’s General Administration of Customs, shows this was no accident. According to IMF economists Jason Lu and Dimitre Milkov, the surge reflected a carefully planned response by Chinese firms that had learned from past trade wars and prepared well in advance.

How China Rushed Goods Before Tariffs

The IMF study describes this strategy as “export frontloading”, shipping goods early to beat higher tariffs. But unlike the brief frontloading seen during the US–China trade war in 2018, the 2024 episode was larger, longer, and more complex. Chinese manufacturers ramped up production in the second half of 2024 and focused heavily on serving the US market. At the same time, they slowed exports of key intermediate inputs, suggesting those materials were kept at home to support higher output of finished goods.

Exporters also made deliberate choices about where goods were sent. Shipments to the US were prioritized over other major markets, even when overall export capacity was limited. This reallocation helped China push unusually large volumes into the US before tariffs took effect.

The Role of Southeast Asia

As 2025 began and new tariffs became unavoidable, China’s export strategy shifted. Exports of finished goods declined sharply, but shipments of intermediate goods to Vietnam and other Southeast Asian countries rose quickly. This pattern points to something more structural than simple rerouting: a deepening relocation of production.

Rather than exporting finished products directly from China, firms increasingly sent components to factories in Vietnam and the wider ASEAN region, where final assembly could take place under lower tariff regimes. This trend has been building since 2018, but the IMF study finds that it accelerated sharply as US trade barriers tightened again.

How Other Countries Helped Absorb the Shock

One of the most striking findings is how China managed the fallout once tariffs hit. Countries such as Germany, Japan, the UK, and the Netherlands saw fewer Chinese imports during the frontloading phase in late 2024. But when exports to the US dropped sharply in April and May 2025, those same countries absorbed a surge of shipments.

In effect, China delayed exports to these markets while racing to ship goods to the US, then “paid them back” later. The IMF researchers call this cross-destination intertemporal reallocation. It helped smooth the impact of tariffs and explains why China’s overall exports did not collapse as many had expected.

This buffering mechanism was largely absent in 2018, when frontloading was brief and followed by a sharper drop in trade. The difference suggests that Chinese firms are now better prepared, more flexible, and more integrated into global supply chains than they were seven years ago.

More Than Just Transshipment

The surge in exports to Vietnam has raised suspicions in some policy circles that goods are simply passing through to avoid US tariffs. But the IMF study finds stronger evidence of real production relocation. Intermediate inputs rather than consumer goods dominate exports to Vietnam, and Vietnam’s manufacturing output rose sharply alongside trade in early 2025. These patterns are difficult to reconcile with simple transshipment, which would add little domestic value.

The broader lesson is that tariffs increasingly reshape how and where goods are produced, not just where they are shipped. China’s export surge in 2024–25 was not a last-minute scramble, but the visible result of years of adjustment to a more fragmented global trading system. For policymakers, it is a reminder that trade barriers often trigger adaptation rather than retreat, and that global supply chains are now built to bend, not break.