Suzhou, China — A new trade landscape is emerging as China’s exports growth fell short of expectations in May, driven primarily by a significant drop in shipments to the United States. The drop comes despite a temporary truce in trade tensions that paused most tariffs for a period of 90 days.

Reports indicate that exports to the U.S. saw a staggering decline of 34.5 percent compared to the previous year—marking the steepest fall since February 2020. Simultaneously, imports from the U.S. also fell by over 18 percent, contributing to a sharp decrease in China’s trade surplus with the U.S., which shrank by 41.55 percent year-over-year to approximately $18 billion.

While overall exports experienced a modest increase of 4.8 percent in U.S. dollar terms, this was below analysts’ predictions of a 5 percent rise, according to customs data released recently. Conversely, imports plummeted by 3.4 percent year-over-year, significantly deviating from forecasts of a minor 0.9 percent decline. The drop is attributed largely to weak domestic demand.

In contrast, China’s trade with Southeast Asia showed resilience, with exports to that region surging nearly 15 percent. Shipments to European Union countries and Africa also saw positive growth, increasing by 12 percent and over 33 percent, respectively, effectively offsetting some of the losses experienced in the U.S. market.

May’s export growth rate marked a severe slowdown from an 8.1 percent increase in April. This was particularly concerning since shipments to the U.S. had already contracted by more than 21 percent that same month, as tariffs imposed during an ongoing trade war took their toll.

The backdrop of this trade turmoil includes the implementation of hefty tariffs by the U.S. in April, which saw duties on Chinese goods rise to 145 percent. Beijing retaliated with its own tariffs, launching a series of restrictive measures, including export controls on essential materials.

Recent negotiations in Geneva between U.S. and Chinese officials resulted in a preliminary agreement, during which a majority of the tariffs were set to be rolled back. Current tariff rates are at 51.1 percent for U.S. goods entering China and 32.6 percent for American imports from China.

The trade situation remains fluid, with Chinese Vice Premier He Lifeng scheduled to meet with U.S. Treasury Secretary Scott Bessent in London for further discussions. This meeting follows renewed tensions, with both countries accusing each other of failing to adhere to the Geneva agreement.

The U.S. has raised concerns about China’s slow progress in fulfilling commitments regarding the export of critical minerals, while China has denounced new U.S. restrictions on Chinese student visas and additional export limitations on technology.

As the discussions continue, China’s Ministry of Commerce stated its intention to review and approve further applications for the export of rare earth minerals, citing rising demand in sectors such as robotics and electric vehicles. This ongoing negotiation reflects the complexities and intricacies of international trade as both nations vie for economic stability amid existing tensions.