TRUMPS TARIFFS

Chinese firms exported nearly $525 billion worth of goods directly to the U.S. last year, marking the third-highest total on record. However, as more companies reroute shipments through countries like Mexico and Vietnam, potential tariffs on all imports—proposed by former President Donald Trump—could impact these trade flows as well.

Since last month's record, the U.S. has imposed new tariffs on all Chinese goods, raising costs for such shipments. In response, China will implement its own tariffs starting Monday, though they will affect only a small fraction of U.S. imports.

Data from Shanghai likely includes some domestic cargo, but nearby Ningbo port also reported a surge, processing 59 million tons in foreign trade last month.

Despite the record-breaking trade figures, flows slowed in late January and early February due to the Lunar New Year holiday, when many businesses shut down for over a week. Some firms resumed operations late last week, but official trade data won't be released until early March, as the government combines January and February figures to account for holiday-related volatility.

The recent U.S. tariffs may not be the final move. Trump has ordered a review of whether Beijing has complied with a trade deal signed during his first term. A report due April 1 could trigger additional punitive measures from Washington.

Bloomberg Economics estimates that an extra 10% tariff could eliminate 40% of Chinese exports to the U.S., potentially reducing China's GDP by 0.9%.