No Panic: In Response to the Trade War with the U.S., China Responds with Export Growth

Chinese exports recorded strong growth in March, indicating a rush to deliver goods before new tariffs imposed by the Donald Trump administration took effect.

According to data from the Chinese Customs Administration released on Monday, exports in March increased by 12.4 percent year-on-year, expressed in U.S. dollars, the highest since October of last year, while imports simultaneously fell by 4.3 percent. Analysts had expected a significantly more modest growth in exports.

The administration of former U.S. President Donald Trump had already imposed additional tariffs of 20 percent on a range of Chinese products in March, before a sharp escalation followed that led to mutual increases in tariff rates to over 100 percent.

This trade war has severely shaken international financial markets, global corporations, and shipyards, which are experiencing an increase in order cancellations. Washington temporarily suspended the introduction of ‘reciprocal’ tariffs on other trading partners last week but increased them further on China, which it seeks to economically isolate. In response, Beijing retaliated on Friday by raising its own tariffs on U.S. goods, in some cases up to 125 percent.

Global markets reacted optimistically on Monday, following dramatic declines in previous days. Stock indices in China, Hong Kong, and Japan rose, while futures indices in the U.S. and Europe also hinted at gains.

– The sky will not fall – said Lu Daliang, spokesman for the Chinese Customs Administration, emphasizing the enormous domestic demand and resilience of the Chinese economy.

Strong Exports

The Chinese economy has heavily relied on exports over the past year, given the slowdown in the real estate sector and weaker personal consumption. In an attempt to stabilize, the Chinese government intervened last week to support the domestic capital market. Although the U.S. Department of Commerce announced on Friday that certain products, such as smartphones, consumer electronics, and some semiconductors and chip manufacturing equipment, would be temporarily exempt from the tariff regime, Trump indicated on Sunday that this decision would not be long-term.

Despite the positive numbers for March, economists warn that the environment for Chinese exports will become significantly less favorable in the coming months. Goldman Sachs last week lowered its forecast for China’s GDP growth this year from 4.5 to 4 percent, citing a ‘sharp decline in exports to the U.S.’

– It could take months or even years for Chinese exports to return to pre-trade war levels – warned Julian Evans-Pritchard, chief economist for China at the consulting firm Capital Economics.

He also noted that there are already signs that Chinese exporters are trying to circumvent tariffs by rerouting shipments through third countries. According to official data, Chinese exports to the U.S. increased by 4.5 percent in March, while shipments to Southeast Asian countries rose even more — by 17 percent to Vietnam and by 18 percent to Thailand. Both countries have also been targets of high U.S. tariffs, which are currently on hold.

China’s trade surplus with the U.S., which Trump has repeatedly cited as a key reason for imposing tariffs, amounted to as much as $76.6 billion in the first quarter. Chinese President Xi Jinping is visiting Vietnam, Malaysia, and Cambodia this week in an effort to strengthen diplomatic and economic relations in the region. Ahead of the trip, he stated that ‘trade wars will not bring a winner.’

According to data from the World Trade Organization, China was the world’s largest exporter in 2023, with a share of over 14 percent in global merchandise trade. The trade war between the U.S. and China began in 2018 during Trump’s presidency and resulted in the imposition of tariffs on hundreds of billions of dollars worth of goods on both sides. Although the Joe Biden administration has attempted to ease tensions, numerous tariff measures remain in place, and a new escalation in March 2025 has once again brought the trade conflict to the forefront.