• China’s U.S. exports fell 12.7% in May due to tariffs.

  • Manufacturing activity contracted, with job losses looming.

  • Global trade faces uncertainty, impacting supply chains.

  • Thailand braces for U.S. tariffs but eyes market opportunities.

  • China redirects exports to Asia, risking regional oversupply.

Trade War Escalates Economic Tensions

China’s exports grew slower than anticipated in May, with a significant 12.7% drop in shipments to the United States, driven by intensified trade war tariffs imposed by President Donald Trump. Official data highlights the strain on global supply chains as U.S.-China trade tensions deepen. Imports also saw an unexpected decline, reflecting weak domestic consumption and broader economic challenges.

The trade war has disrupted China’s export-driven economy, with shipments to the U.S. falling sharply compared to a modest overall export growth of 4.8%. This slowdown marks a critical moment for China, as tariffs continue to reshape global trade dynamics.

Manufacturing and Employment Under Pressure

China’s manufacturing sector faced significant setbacks in April, with the purchasing managers’ index dropping to 49.0, indicating a contraction in activity. This decline, the sharpest in over a year, was driven by reduced export orders and a contracting manufacturing workforce, hitting its lowest level since February 2024.

The trade war has led to fears of widespread job losses, with estimates suggesting up to 5.7 million immediate job cuts if U.S. exports drop by 50%. Long-term ripple effects could impact 15.8 million workers, underscoring the severe economic toll of escalating tariffs.

China has responded with retaliatory tariffs of 125% on U.S. goods, further intensifying the economic standoff. Beijing is now focusing on stimulating domestic spending through subsidies and pension improvements to offset weak consumption amid a persistent property crisis.

Global Trade Faces Uncertainty

The trade war extends beyond U.S.-China relations, affecting global markets. Thailand, a key U.S. trading partner, faces potential tariffs of up to 36%, threatening its export sector. Thai businesses are bracing for disruptions, with some products like pet food and rice positioned to gain U.S. market share as Chinese goods face higher levies.

Global GDP growth is projected to slow to 2.3% in 2025, the lowest since the COVID-19 pandemic, driven by trade uncertainties and declining consumption in major economies. The Asia-Pacific region, however, is expected to grow at 3.9%, with emerging markets showing resilience.

China’s exports to other regions, particularly Asia, surged in April as businesses redirected goods to avoid U.S. tariffs. This shift has sparked concerns about oversupply in markets like Thailand, where Chinese products could disrupt local production and increase trade deficits.

Efforts to mitigate the trade war’s impact include Thailand’s push for trade negotiations with the U.S. to reduce tariffs and diversify export markets. Such strategies aim to cushion the blow of global trade disruptions and maintain economic competitiveness.

#TradeWar #ChinaExports #USTariffs #GlobalTrade #EconomicImpact