China’s exports rose last month, just not quite enough to please economists, who were hoping for 6% growth and instead got a slightly underwhelming 5%. That’s still a respectable $316 billion worth of goods shipped abroad in May, but hidden beneath that headline was a brutal 34.4% collapse in exports to the United States, the sharpest drop since the early pandemic shutdowns of 2020.

A record in overall exports would be cause for celebration. Yet, the nosedive in US demand has forced Beijing back to the negotiating table with President Trump’s team in Geneva, where both sides have agreed to a “tariff truce”, a temporary ceasefire in a trade war no one’s really winning.
While exports to the US declined, shipments to other parts of the world increased by 11%. A minor consolation, perhaps — though not enough to offset the gravitational pull of the world’s largest economy. Even with Chinese firms increasingly rerouting their goods through third countries like Vietnam — which saw a 22% rise in Chinese shipments, Washington isn’t fooled. It only widens America’s trade deficit with the rest of Asia and sharpens the knives for the next round of tariff threats.

Meanwhile, rare earth exports, those precious metals at the heart of geopolitical sabre-rattling, have crept back up. That’s despite new Chinese licensing restrictions, which earlier this year caused global supply chain convulsions and forced manufacturers into awkward production pauses. With negotiators now headed to London for further talks, these strategic materials will once again take centre stage.

On the import side, things look equally grim. China’s inbound trade dropped for a third consecutive month, leaving a trade surplus of $103 billion. It’s a neat trick: export more, import less, but watch your domestic economy flounder anyway. The inflation data confirmed the trend rather than deflation. Factory prices fell for a 32nd straight month, and consumer prices followed suit. Nothing like a bit of economic malaise to keep things interesting.
The tariff truce hasn’t made much difference yet. The record trade surplus, edging towards half a trillion dollars so far this year, might offer Beijing some relief. But come the second half of 2025, global risks could return with a vengeance, casting doubt over China’s already fragile recovery.

To make matters worse, Washington is now threatening to impose new tariffs on a range of countries by early July, and specifically on China, from August. That could further hammer demand, especially for Chinese goods used as components in manufacturing elsewhere. And even if Beijing secures a deal with Trump’s ever-mercurial team, the rest of the world may already be trimming back its orders, exhausted by the uncertainty and done with stockpiling in anticipation of tariff bombs.
As for the bigger picture? The great decoupling isn’t just theoretical anymore. It’s happening, container by container.