China’s reliance on U.S. trade hits new low as Trump tariffs loom

The U.S.’s share of trade with China has dropped to its lowest level since China joined the World Trade Organization in 2001 as Beijing prepares for potential tariffs with the return of the Trump administration.

The U.S. accounted for 11.2% of China’s overall imports and exports in dollar terms for the January-November period, Chinese customs data shows, down 4.6 percentage points from the 2001 share. The data covers merchandise trade.

China has significantly reduced its reliance on trade with the United States since the retaliatory tariffs of 2018 and 2019, introduced during Donald Trump’s first term as president. With Trump now proposing a new 10% tariff on nearly all Chinese goods after his anticipated return to office in January, Beijing is preparing for another round of trade tensions.

Trump has previously floated the idea of tariffs exceeding 60% on Chinese imports. According to estimates by the Japan Center for Economic Research, such a measure could slash China’s economic growth from a projected 4.7% in 2025 to 3.4%, with growth likely staying below 4% even if Beijing retaliates with its own tariffs.

The U.S. share of China’s trade has been steadily declining since 2005, a period when China ramped up exports to rapidly growing emerging markets. While the U.S.-China trade relationship saw some recovery beginning in 2013 under President Xi Jinping, it took a sharp hit during the 2019 trade war, with the U.S. share dropping 2.5 percentage points that year alone.

On Tuesday, President Xi sought to minimize concerns over Trump’s proposed tariffs, reaffirming China’s commitment to achieving its annual GDP growth target of 5%.

In his televised New Year’s address, Xi acknowledged the challenges facing the Chinese economy, including external uncertainties and transitional pressures on key growth drivers. “These challenges can be overcome with effort,” he said. “We have always grown stronger through trials and thrived in the face of adversity. We must remain confident.”

From January to November 2024, exports to the U.S. accounted for just 14.6% of China’s total exports, the lowest level since the country joined the WTO in 2001. Imports from the U.S. also fell, dropping 4.4 percentage points to 6.3%.

Much of China’s trade has shifted toward Southeast Asia. Over the first 11 months of 2024, exports to ASEAN countries exceeded $520 billion, representing 16% of total Chinese exports—more than to any other country or bloc. Exports to Cambodia and Vietnam alone surged nearly 20% each.

This shift may also be partly driven by Chinese exporters routing goods bound for the U.S. through third countries to skirt tariffs. However, concerns are mounting in Asian and Latin American markets over Chinese firms “exporting deflation” by offloading surplus goods at heavily discounted prices.

On the import side, China has reduced its dependence on U.S. commodities, particularly grains. From January to November, Brazil supplied approximately 70% of China’s imported soybeans, while the U.S. accounted for just 20%. Before the trade war in 2017, Brazil’s share stood at roughly 50%, with the U.S. at 30%.

Those were the products most exported from Brazil to China in containers in 2024. This relevant information comes from DataLiner.

Most Exported Products to China | 2024 | TEUs

Source: DataLiner (click here to request a demo)

Chinese imports of U.S. wheat have also fallen, dropping below 20% from nearly 40% in 2017, as Australia, Canada, and France emerged as key suppliers.

During the trade war, Beijing imposed retaliatory tariffs on U.S. soybeans, wheat, and other goods. It has since diversified its sourcing to bolster food security in anticipation of prolonged tensions with Washington.

Some analysts believe the trade dynamic could shift if tensions escalate, given Trump’s deal-making tendencies. “China might pledge to increase imports from the U.S. as part of a potential agreement with Trump to avoid or roll back tariffs,” said Naoki Tsukioka of Mizuho Research & Technologies.

Source: Nikkei Asia

Reporting by KENTARO SHIOZAKI

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