China’s exports to the US plunged a whopping 33% in August – but it still managed to eke out a rise in overall exports as it pivoted to European Union nations and other trading partners.
Overall exports rose 4.4% as China switched to new markets amid President Trump’s crackdown on packages attempting to avoid tariffs.
While the slowest growth since February, it showed China’s ability to capitalize on new markets instead of eating the United States’ 55% tariff on Chinese goods – which Trump has threatened to hike as high as 200%.
“Chinese exporters have been pushing for higher market share in other countries due to weak domestic demand in China,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note.
“This ‘going abroad’ initiative likely contributed to the resilience of Chinese exports so far this year.”
The nation’s shipments to the EU, the Association of Southeast Asian Nations and Africa surged 10.4%, 22.5% and nearly 26% in August, respectively.
So far this year through August, China’s exports to the US plunged 15.5% from the same period last year. Imports dropped 11%.
Over that same period, its exports to the EU, ASEAN, Africa and Latin America soared 7.7%, 14.6%, 24.6% and nearly 6%, respectively.
The US still remains China’s largest trading partner by far, however, taking in $283 billion worth of Chinese goods this year as of August.
China’s exports to the entire 27-nation EU bloc, meanwhile, reached $541 billion over the same period.
“With the temporary boost from the US-China trade truce fading and the US raising tariffs on shipments rerouted via other countries, exports are likely to come under pressure in the near term,” Zichun Huang, China economist at Capital Economics, said in a note.
Imports from the US also dropped 16% in August compared to the year before.
China’s overall imports rose 1.3% from a year earlier for its third straight monthly increase.
But the figure remained muted – missing estimates of 3% growth amid a lasting pandemic-era real estate crisis, rising job insecurity and deflationary pressures.
Exporters have been craftily routing shipments to third countries to avoid paying the hefty tariff rates – but Trump has cracked down on these so-called transshipments, announcing a 40% tax on any such packages.
He also axed the de minimis exemption, a circa 1938 rule that allowed parcels worth less than $800 to skip the customs process and avoid import taxes – arguing that it has become a loophole for Chinese firms and for criminals sneaking drugs into the US.
Postal traffic into the US plunged by more than 80% after Trump signed an executive order killing the import tax exemption in July, according to the United Nations postal agency.
Several airlines and carriers have said they are unwilling or unable to collect such duties – which has caused “major operational disruptions” and forced postal traffic “to a near-halt,” the Universal Postal Union said.
Eighty-eight postal operators have told the UPU that they have suspended some or all postal services to the US until a solution is reached.
Traffic from the group’s 192 member countries – nearly all the world’s nations – cratered 81% on Aug. 29, when the new rule took effect, compared to the week before.
The UPU said it has started rolling out some measures to help postal operators around the world calculate and collect these import taxes.
Ahead of the rule change, the postal union sent a letter to Secretary of State Marco Rubio with concerns that its members were not given enough time or guidance to comply with the rule reversal.
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