Chinese imports have plummeted to their lowest levels since the pandemic, driven by escalating U.S. tariffs and weakening domestic demand.

Trade War Escalation and Tariff Impacts

In early 2025, the U.S. under President Donald Trump intensified trade measures against China, imposing tariffs up to 145% on various Chinese goods. This move aimed to pressure Beijing on issues like fentanyl trafficking and trade imbalances. China retaliated with its own tariffs and non-tariff barriers, including blacklisting U.S. companies and restricting exports of critical materials like rare earths.

These actions led to a significant decline in Chinese imports. In the first two months of 2025, imports fell by 8.4% year-on-year, with notable decreases in commodities such as crude oil (down 5%), rare earths (down 24.1%), and copper (down 7.2%). State-owned enterprises, major importers of these commodities, reduced their purchases by 20.6%, indicating a strategic scaling back amid trade uncertainties.

Temporary Tariff Relief and Ongoing Challenges

In May 2025, a temporary 90-day trade truce was established between the U.S. and China, reducing U.S. tariffs on certain Chinese goods from 145% to 30%. This relief particularly affected low-cost retailers like Temu and Shein, which had previously faced steep tariffs. However, many Chinese imports, especially in sectors like medical supplies, continue to face high tariffs.

Despite this temporary easing, the broader economic impact remains significant. Chinese businesses express cautious optimism but remain wary of future policy reversals. The uncertainty has led some companies to suspend expansion plans or shift operations abroad.

Economic Outlook

The combination of trade tensions and internal economic challenges, such as a sluggish property market and high debt levels, continues to weigh on China’s economy. While the temporary tariff reductions offer short-term relief, long-term recovery will depend on structural reforms and sustained policy support.

Investors and policymakers will closely monitor the situation as the 90-day truce progresses, with hopes for a more stable and mutually beneficial trade relationship between the U.S. and China