China’s annual trade surplus topped $1 trillion for the first time, a sign that President Donald Trump’s high tariffs have done little to stop Chinese factories from flooding global markets with cars, electronics, machinery, solar panels and other manufactured goods.
The unbalanced global economy that the president set out to change earlier this year remains deeply distorted.
China has responded to the highest U.S. tariffs since the 1930s by redirecting its factory output from American ports to Europe and Southeast Asia. While trade tensions between Washington and Beijing have eased in recent months, a backlash against Chinese-manufactured goods is brewing in Europe.
Seven years after Trump began imposing tariffs on Chinese goods during his first term to force an overhaul of China’s economic model, the government in Beijing continues to subsidize manufacturing at the expense of Chinese consumers. The result is a structural tilt toward higher Chinese exports and comparatively anemic imports that is raising the chances of a confrontation between China and a growing number of its trading partners.
Trump’s year-long trade blitz has raised tariffs on almost all of the merchandise that the United States imports. But there has been no visible progress at tackling the main drivers of global imbalances, such as misalignments between the U.S. dollar and key foreign currencies, including the Chinese yuan, South Korean won and Taiwanese dollar.
“The administration just hasn’t made a concerted push to negotiate around the issues that are central to imbalances,” said economist Brad Setser, who served in the Treasury Department during the Obama administration.
China’s currency, the yuan, has weakened in recent years even as its trade surplus ballooned. That’s the opposite of what would be expected to happen. But Chinese authorities acted to prevent the yuan from rising, which would make Chinese goods more expensive to foreign customers.
China’s perennial trade surplus is mirrored by a deficit in the United States. Though Trump’s tariffs have reduced total trade between the two nations, China continues to ship to American customers roughly three times as much as it buys from them, according to Census Bureau data.
In April, the president declared a national emergency over the trade deficit that the U.S. has run every year since 1975. He has blamed “unfair trading practices” on the part of other nations as well as domestic economic policies that discourage consumption for the U.S. trade deficit.
“This status quo of large and persistent imbalances is not sustainable,” Treasury Secretary Scott Bessent said in an April speech.
Mainstream economists, however, say trade outcomes are driven by economic policies within individual nations. The U.S. and China, for example, are joined in a symbiotic relationship: China produces more than it consumes while the U.S. consumes more than it produces.
“Tariffs do not affect trade balances. Trade balances are driven by investment and savings rates within economies,” said Neil Shearing, group chief economist for Capital Economics in London.
The White House did not respond to a request for comment.
The growing Chinese trade surplus reflects weak domestic demand following the 2021 collapse of an epic property bubble, said Setser, a senior fellow with the Council on Foreign Relations. Chinese factories continued producing enormous amounts of steel, cement and household furnishings, even as the country’s developers stopped building new homes and apartment towers. And cash-strapped Chinese consumers stopped buying so many foreign goods.
Rather than shutter factories or stimulate consumer spending, Chinese authorities effectively directed the excess production to foreign markets. Since 2017, China’s trade surplus has roughly tripled in size.
China’s General Administration of Customs said Monday that for the first 11 months of the year, exports increased 5.4 percent compared with the same period last year, while imports fell slightly. That meant China ran a global trade surplus of $1.07 trillion, exceeding the $990 billion surplus recorded for the whole of 2024.
“Put simply, China’s price competitiveness is extremely strong,” said Xu Tianchen, a senior economist for the Economist Intelligence Unit in Beijing. “The main reason behind the continued growth of China’s exports … is not … because the overall size of global trade has expanded, but because China is claiming a larger share of the existing trade landscape.”
Indeed, China’s exports are growing faster than global trade, which means Chinese companies are taking market share from their foreign rivals.
One reason Chinese goods carry such attractive prices is that the authorities — by controlling cross-border capital flows and intervening in foreign exchange markets — make sure the currency stays weaker than it would be if its value was determined by market forces.
Exports to the U.S. fell 28 percent in November compared with the same month last year, an even greater decline than the 25 percent annual drop recorded in October, according to the official data.
This comes after an October meeting between Trump and Chinese leader Xi Jinping, when a trade truce negotiated between the two sides earlier in the year was extended. Trump cut tariffs on imports from China, and Xi agreed to resume purchasing soybeans and to delay restrictions on rare-earth mineralsfor a year.
Xi signaled a willingness to travel to the U.S. early next year, and Trump has said he would probably travel to Beijing in April. Both sides aim to have a permanent trade agreement ready by then, analysts said.
Xi went into the October meeting feeling confident, analysts said, because Trump’s tariff onslaught had not caused much damage to export-dependent China, even as its domestic economy was ailing. The latest data shows this trend is continuing, despite a blip in October.
That is partly because China appears to be “transshipping” more goods through Southeast Asia, despite the Trump administration’s attempts to crack down on the practice.
Monday’s figures showed an 8 percent annual jump in the first 11 months of the year in Chinese exports to Southeast Asia, where Chinese-made goods can be assembled and shipped on to the U.S. market.
China’s exports to Southeast Asia have grown strongly, Xu said. “A large part of that is likely products that were ultimately destined for the U.S., but now make a stop in Southeast Asia.”
It was also notable that the decline in exports to the U.S. was made up by a surge in China’s exports to the rest of the world.
That will be of particular concern in the European Union, where Chinese exports rose at an annual rate of 14.8 percent in November.
French President Emmanuel Macron, returning from a state visit to China, threatened to impose tariffs on Chinese goods if Beijing did not take action to reduce its enormous trade surplus with the E.U.
“I told them that if they don’t react, we Europeans will be forced to take strong measures in the coming months,” Macron told Les Echos, the French business newspaper, in an interview published Sunday. Tariffs could be modeled after those imposed by the United States, he said.
Germany, whose auto industry accounts for roughly 5 percent of economic output, is threatened by the swift emergence of Chinese automakers. China’s global car exports soared by 53 percent in November, up from an already extraordinary 34 percent rise in October.
Rudy Lu contributed to this report.
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