China's Trade Surplus Blows Past $1 Trillion

In the first half of 2025, the Trump administration made an unprecedented effort to shake loose China's grip on the American import market, employing sky-high tariffs to deter importers from buying Chinese goods. It worked, but not by reducing China's exports overall. Chinese manufacturers are making and shipping more finished goods than ever before - but they're now selling to other countries.

China's trade surplus in goods has broken an annual record: Chinese exports exceeded imports by $1.1 trillion in the first 11 months of the year, and the gap is still widening. For comparison, this amount is roughly equal to the GDP of Poland, or the annual total of U.S. holiday season retail spending.

China's exports to the U.S. market dropped by about 20 percent year-over-year, but this was more than offset by a substantial growth in sales to Europe, Southeast Asia, Latin America and Africa. Given the prevalence of re-packaging and transshipment operations in overseas markets, some of this cargo surge ended up in the U.S. market by circuitous means - but far from all of it. China has been making inroads with consumers in alternate markets all over the world, from developing nations to high-GDP European countries.

The lopsided trade imbalance is driven by burgeoning industrial capacity, promoted and sponsored by China's government. Manufacturing rose six percent in the year through November, despite tariffs. Persistently low consumer purchasing and fierce domestic competition give Chinese companies a powerful incentive to find overseas customers - often to the annoyance of China's trade partners.

"I’m trying to explain to the Chinese that their trade surplus isn’t sustainable because they’re killing their own clients, notably by importing hardly anything from us any more," said French President Emmanuel Macron last weekend, speaking to French outlet Les Echos.

As for the U.S. market, those Chinese goods are not expected to start flooding back soon, at least not in the near term. The latest version of the National Retail Federation (NRF) Global Port Tracker report predicts continued import volume declines through the first half of 2026 at U.S. container ports. The White House's early tariff hikes may have been smoothed down, but the effects of tariffs (and tariff uncertainty) on import cargo demand will continue to be felt for months, per Hackett Associates, the firm that conducts the survey for NRF. Double-digit percentage declines in import trade volume could be seen in the first quarter.