China’s export growth slowed in May due to US tariffs, with declining trade and ongoing negotiations amid economic stimulus efforts.

China’s export growth experienced a notable slowdown in May, falling to a three-month low largely due to a significant drop in shipments to the United States. This decline comes in the wake of tariffs imposed by the administration of then-President Donald Trump, according to customs data released on Monday. The data highlights the ongoing challenges faced in trade relations between the world’s two largest economies.

While Chinese exports still increased by 4.8% compared to the same month last year, this growth rate was substantially lower than the 8.1% year-on-year rise recorded in April. More importantly, shipments to the United States—a key trading partner—fell sharply by nearly 12% from the previous month, signaling a potential cooling of trade activity between the two nations amid escalating trade tensions.

This slowdown was reported just hours before another critical round of trade talks between US and Chinese officials scheduled to take place in London. These talks are seen as a pivotal moment, with both sides aiming to find a way forward after months of uncertainty and tariff escalations.

In concrete terms, China exported goods valued at $28.8 billion (€25.23 billion) to the US in May, a decline from $33 billion worth of shipments in April. Analysts attribute the relatively high export numbers seen in March and April to a rush by exporters who hurried to ship goods ahead of expected tariff hikes. This front-loading effect artificially inflated trade figures during those months but was not sustainable, leading to the observed slowdown in May.

On the import side, China also saw a decrease in goods coming from the US, with imports falling by 7.4% to a total of $10.8 billion. This reflects the reciprocal impact of trade tensions, as tariffs and trade barriers affect both exports and imports, disrupting supply chains and demand.

Adding a diplomatic dimension to the economic data, President Donald Trump reported on Thursday that he had a “very good phone call” with Chinese President Xi Jinping. Trump characterized the conversation as producing “a very positive conclusion for both countries,” suggesting a thawing in relations after a period of heightened tensions. The call took place within the context of a 90-day tariff truce that was initiated the previous month, temporarily pausing what had been a rapidly escalating trade war.

As part of this truce, Trump agreed to reduce tariffs on Chinese goods from an extremely high level of 145% down to 30% for the duration of 90 days, in order to create a more conducive environment for negotiations. Similarly, China lowered its tax rates on US goods from 125% to 10%, signaling willingness to ease economic pressure and potentially pave the way for a longer-term resolution.

However, despite these promising diplomatic signals, the trade talks continue amid underlying tensions. US policymakers have expressed frustration over China’s continued stalling in granting export licenses, particularly for rare earth elements and other critical materials essential for high-tech, defense, and clean energy sectors. These materials are vital components for advanced manufacturing and national security, making access a highly sensitive issue in the trade negotiations.

Further compounding the economic situation, Chinese government data also showed a decline in the producer price index, indicating that prices received by manufacturers fell, which could signal weakening demand or overcapacity in some sectors. Meanwhile, consumer prices also dipped slightly, suggesting subdued inflationary pressures within the domestic market.

In response to these economic challenges and in an effort to soften the blow from the trade tensions, Beijing introduced a series of new stimulus measures in May. Among these were interest rate cuts aimed at encouraging borrowing and investment to support economic growth. These moves reflect the government’s proactive approach to stabilizing the economy amid external pressures and uncertainties from ongoing trade disputes.