China’s export growth is expected to have declined sharply in April due to the effects of tariffs imposed by former U.S. President Donald Trump, alongside increasing uncertainty regarding potential trade negotiations between the two largest economies. According to a poll of 32 economists conducted by Reuters, outbound shipments are projected to have risen by only 1.9% year-on-year in value terms, a significant drop from the 12.4% increase observed in March.
This prior surge was largely driven by producers making last-minute shipments before the tariffs came into force. Meanwhile, imports are also predicted to suffer, with forecasts suggesting a decline of 5.9% compared to the same period last year, following a 4.3% decrease in March.
The upcoming trade data, set to be released on Friday around 0300 GMT, will provide insight into the immediate impact of the ongoing trade conflict on China’s vast $18.7 trillion economy. In recent months, Beijing has increasingly relied on exports to support its fragile economic recovery from the pandemic but has only begun earnest efforts to stimulate domestic demand since late last year.
In response to the heightened tariffs, which now stand at 145% on many Chinese goods, China has retaliated by imposing restrictions on exports of certain rare earth elements and raising tariffs on U.S. products, including a 125% tariff on various goods. A meeting scheduled for Saturday in Switzerland could pave the way for trade talks aimed at reducing tensions.
Economists remain divided on the potential impact of these tariffs on China’s overall exports, with estimates ranging significantly from a 7.0% growth to a 3.5% decline. Recent data from the official purchasing managers’ index (PMI) indicates a contraction in China’s factory activity, while analysts estimate that U.S. tariffs directly affect about 2.2% of China’s GDP, potentially leading to a loss of 1.1% in the short term if exports to the U.S. were to be halved.
To mitigate the economic fallout from the trade war, Chinese authorities have introduced several monetary stimulus measures, including liquidity injections and policy rate cuts. For April, China’s trade surplus is projected to be $89 billion, down from $102.64 billion in March.