The U.S View
In broad terms, China accounts for 8% of total U.S. exports, while the U.S. accounts for about 6% of China’s imports. This does not come as a surprise. The role of the U.S. as a supplier to China’s vast needs for ores is minimal. However, little known to most, China imports $2 billion worth of cotton from the U.S. — accounting for 30% of total U.S. cotton exports.
For the U.S., its top 15 exports to China represent 9% of the U.S.’s top 15 export categories worldwide. These same categories account for 83% of all U.S. exports to China.
The only true chokepoint for the U.S. is oilseeds: 42% of its soybean exports go to China.
On April 11, the Trump administration said it would exclude smartphones and laptops from reciprocal tariffs, In 2024, China exported to the U.S $35bn (smartphone) and $25bn (laptop)
China, on the other hand, relies on just two aircraft suppliers—the U.S. and the EU—even as it develops its own domestic industry. This creates a degree of dependence on the U.S. in that sector.
The China View
In broad terms, the U.S. accounts for 15% of total China exports, while China accounts for about 16% of U.S. imports. Note that China’s export-to-import ratio is more than 3, resulting in a significant daily trade surplus of $1 billion for China, which makes up 36% of China’s total goods trade surplus. We have strong doubts that China will be able to find a similar source of surplus to what it currently gains from the U.S. in the medium term. While rhetoric and bold statements are common, securing a daily surplus of $1 billion is almost an impossible challenge.
For China, its top 15 exports to the U.S. represent 16% of of China’s top 15 export categories worldwide, with these categories accounting for 84% of all Chinese exports to the U.S. Except for auto, losing the U.S. as a market would create a significant gap in the export prospects of many sectors in China. Many of these sectors could face serious challenges, including rising unemployment. Especially because many of these sectors rely on cheap labor, with low skill levels, and have a weak safety net.
Chinese exports to the U.S., measured at FOB value, account for about 2% of U.S. GDP. Introducing tariffs of 50%, 100%, or 125% would sharply raise the landed price in the U.S. The increase compared to previous tariffs would be significant, forcing the U.S. to face inflationary pressures if it continues importing. However, finding viable alternatives at competitive prices outside of China seems highly unlikely for the U.S. in the near term.
Only Two-Thirds of China’s Imports from the U.S. Are General Trade
When it comes to decoupling from China, the trade mode matters. Only 63% of China’s imports from the U.S. come through General Trade, compared to 72% for Germany and 74% for Spain. At the far end of the spectrum is a resource-heavy supplier like Australia, where over 90% of China’s imports arrive via General Trade.
Surely the EU isn’t looking to recreate a China 2.0—right?
President von der Leyen held a phone call with Premier Li Qiang on April 8 to discuss the state of EU-China relations.
According to the EU readout, President von der Leyen emphasized China’s critical role in addressing possible trade diversion caused by tariffs, particularly in sectors already affected by global overcapacity. The readout states that both leaders
“discussed setting up a mechanism for tracking possible trade diversion.”
We wonder whether Premier Li acknowledged (*) the issue of overcapacity—especially given that, according to Xi Jinping, there is no such thing as overcapacity in China.
(*) The later-published readout from the Chinese side made no mention of the term ‘overcapacity’
On April 16, China will release its Q1 GDP data, which we anticipate will reach 31.85 trillion yuan. This represents a nominal year-on-year growth of approximately 4.5%. Given the decline in both CPI and producer prices in the first quarter compared to the same period last year, we expect the government to adjust for a deflation of -0.8%, resulting in a real growth rate slightly above 5%.
From January to March, the national consumer price fell by 0.1% over the same period of the previous year. Ex-factory prices of industrial producers dropped 2.3% in Q1 2025 compared with the same period last year. The only industrial products with rising prices are in the non-ferrous metal sector (aluminum, copper, etc.).
On April 8, the White House announced a de minimis tariff increase.
On April 4, TEMU announced an agreement with Germany’s DHL.
TEMU is a Chinese e-commerce platform focused on ultra-low-cost goods, primarily shipped from China to consumers in the U.S., Europe, and other markets. Its rise mirrors Shein’s model but with a broader product range, leveraging China’s supply chain for extreme cost savings.
One interesting question is whether the WTO will still exist in two years, given the current situation with tariffs and counter-tariffs. We thought about saying there’s a 50% chance, but that would just be a guess—like flipping a coin.
Instead, we think there’s only a 30% chance the WTO will work the same way in two years. In the worst case, it could become a less important organization, with trade driven more by power politics than by rules. The WTO might continue in name, but major economies could bypass it with bilateral deals. Its dispute system could fall apart as superpowers ignore rulings. While agriculture may still be covered, other sectors could fade away. China could focus on the CPTPP, and the EU might build its own system for handling trade disputes.
As for the U.S., it looks like it’s creating a G1 Trade Alliance, with the U.S. standing alone as the only member.
A 3.5% growth rate is clearly insufficient for such a large economy, highlighting the many underlying challenges China faces. For SMEs exporting to China, such modest growth in the domestic retail market hardly justifies the complexities of doing business there. The hidden barriers, unpredictable regulations, and constant hurdles make it difficult to see much reward. It’s no surprise, then, that there’s a sense of ‘fatigue’ when hearing, for the umpteenth time, the mantra of China’s further opening up.
ZPMC (Shanghai Zhenhua Heavy Industries Company Limited) is a Chinese state-owned enterprise and a global leader in gantry cranes. On April 9, through an Executive Order, Trump established tariffs on ship-to-shore cranes manufactured, assembled, or made using components of PRC origin, or manufactured anywhere in the world by a company owned, controlled, or substantially influenced by a PRC national.
The picture shows former U.S. Trade Representative Katherine Tai greeting British Secretary of State for International Trade Anne-Marie Trevelyan three years ago at the Port of Baltimore.
We can’t help but notice that all the cranes in the background are from ZPMC.
Bill Bishop, editor of the Sinocism newsletter, rightly called it a grim week and asked readers to share something hopeful. We sent him this photo first — taken as we were leaving the office last Friday — and now we’re sharing it with you too.
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