In Depth: China’s Export Engine Reboots Cautiously After Tariff Truce

The sudden halt in the U.S.-China trade war has revived Chinese ports and reignited trade activity. Ships previously waiting offshore began docking, logistics firms scrambled to bring back workers, and truck drivers resumed routes that had been idle during the trade impasse[para. 1]. At Shanghai’s Yangshan Port, truckers such as Wang received their first orders in weeks immediately after the May 12 truce announcement. Previously, his work volume had halved due to the standoff[para. 2]. After the truce, there was a surge in inquiries at freight agencies, with exporters rushing to clarify tariffs and shipment schedules[para. 3]. Some ships, like the large MSC Ivana, had been waiting since early May for cargo before finally being able to dock and load[para. 4]. However, port staff indicated that vessel numbers had not yet returned to pre-conflict levels, warning that only with increased cargo volumes would stability be restored to the shipping schedule[para. 5].

The sudden rebound in demand has led to new logistical challenges, including acute shortages of shipping containers and storage space. Many containers remain stranded in the U.S., while domestic inventories decline. As a result, trans-Pacific shipping rates have risen from $2,000 to around $2,500 per 40-foot container, per Jefferies[para. 6]. U.S. clients are anxious to restock, with some willing to absorb tariffs just to secure goods[para. 7]. Exports of consumer goods, auto parts, and some rare earths are bouncing back, while bulk commodities like copper and aluminum remain ensnared in earlier tariffs[para. 8].

Despite a 90-day truce reducing the top U.S. tariff on Chinese goods from 145% to 30%, some goods still face cumulative tariffs of up to 60%. Based on data from Kaiyuan Securities, electrical equipment faces 45.3% tariffs, textiles 49%, and electronics 35.1%[para. 9]. This persistent tariff landscape is causing some exporters to shift focus away from the U.S. market[para. 10]. For instance, China’s exports to the U.S. rose by 9.1% in March due to a pre-tariff rush, but dropped by 21% in April. Conversely, exports to Southeast Asia and Latin America are rising, with intermediate and capital goods leading the way, implying supply chains are being adjusted[para. 11].

Similarly, Chinese imports from the U.S. remain subdued as China imposes retaliatory tariffs, especially on agriculture and energy. China has turned to suppliers like Brazil for goods such as soybeans[para. 12]. Some companies, like Weierda Sunshade Equipment, received a surge in U.S. orders hoping to beat the 90-day window, benefiting from a temporary drop in tariffs on sunshades[para. 14]. Other exporters, particularly large ones such as Midea Group, resumed U.S. shipments instantly, while many smaller firms are taking longer to restart operations[para. 16]. Nonetheless, the lingering tariffs have forced difficult negotiations over who will absorb costs, with U.S. traders likely shouldering the burden for low-margin items[para. 17].

A broader strategic shift is under way. Exporters are increasingly looking to diversify beyond the U.S., focusing on Europe, South America, and boosting domestic sales via new e-commerce zones[para. 22][para. 23]. China’s Yiwu export hub now sends 62% of its exports to Belt and Road countries, with only 3.3% going direct to the U.S.[para. 28]. E-commerce giants like Shein and Temu are rapidly expanding advert spending in Europe and Brazil — efforts that have resulted in large gains in downloads and user engagement[para. 26]. Meanwhile, TikTok Shop and other platforms are steering sellers toward non-U.S. markets with launches in multiple European countries[para. 27].

Amid this realignment, sectors facing the highest U.S. tariffs — steel, aluminum, and machinery — remain deeply affected. U.S. duties on Chinese steel and aluminum typically exceed 70%, sometimes totaling over 400%[para. 32]. In 2024, China sent only 0.8% of its steel and 4% of its aluminum exports to the U.S.[para. 34]. Even as some trade resumes, uncertainty spurs exporters to push out shipments quickly before policies shift again[para. 36].

The lithium battery sector, a critical Chinese export, is also shifting emphasis away from the U.S. Even though the U.S. was China’s top battery market, Germany overtook it in early 2024 following new tariffs. While U.S. tariffs on battery products have recently fallen (from 173.4% to 58.4% for vehicle batteries, for instance), companies remain wary of establishing a U.S. presence, focusing instead on exports and partnerships[para. 41][para. 45][para. 46].

In sum, while the trade truce has revitalized some trade flows, deep uncertainties and high tariffs persist. Chinese exporters, wary of further U.S. policy changes, are diversifying markets, leveraging domestic e-commerce, and hedging against future shocks, marking a significant supply chain realignment[para. 47].