China's exports pick up as Trump tariff deadline looms
Businesses on both sides of the Pacific are waiting to see whether the world's two largest economies can agree on a more durable deal or if global supply chains will again be upended by the reimposition of duties exceeding 100%
Highlights:
- China's export growth quickened in June, imports rebound
- Exporters making most of US-China tariff truce, analysts say
- China's trade surplus grew to $114.7 billion last month
China's exports regained some momentum in June while imports rebounded, as firms rushed out shipments to capitalise on a fragile tariff truce between Beijing and Washington ahead of a looming August deadline.
Businesses on both sides of the Pacific are waiting to see whether the world's two largest economies can agree on a more durable deal or if global supply chains will again be upended by the reimposition of duties exceeding 100%.
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Customs data on Monday showed outbound shipments from China rose 5.8% year-on-year in June, beating a forecast 5.0% increase in a Reuters poll of economists and May's 4.8% growth.
Imports rebounded 1.1%, following a 3.4% decline in May. Economists had predicted a 1.3% rise.
"There are some signs that frontloading demand is beginning to wane gradually," said Chim Lee, senior analyst at the Economist Intelligence Unit. "While frontloading ahead of the August tariff pause deadline is likely to continue, freight rates for China-bound shipments to the US have started to decline."
He added, export controls between the US and China have eased substantially, with trade conditions now broadly back in line with those seen mid-April.
Trade ties appeared to stabilise in June after US and Chinese negotiators agreed to revive a fragile truce reached during talks in Geneva in May. The agreement had been strained before the talks by a series of export controls that disrupted global supply chains for key industries.
China's rare earths exports rose 32% in June from the month before, the customs data showed, in a sign that agreements struck last month to free up the flow of the metals were possibly bearing fruit.
But as Trump further broadens his global trade offensive with new tariffs on other partners, analysts caution that Beijing could be indirectly hurt by US pressure on third countries used heavily for transhipments of Chinese goods.
Trump had recently unveiled a 40% tariff on US-bound transhipments through Vietnam, a move that could undermine Chinese manufacturers looking to reroute shipments and avoid higher duties.
The US president has also threatened a 10% charge on imports from BRICS countries, in which China is a founding member, raising further risks for Beijing.
China faces an August 12 deadline to reach a durable deal with the White House.
Compounding the challenges, tensions with the European Union have also intensified. Ahead of a key summit later this month, the EU accused China of flooding the global market with excess capacity and enabling Russia's war economy.
China's June trade surplus came in at $114.7 billion, up from $103.22 billion in May.
