The total value of goods exchanged between the U.S. and China recorded by the U.S. Census Bureau increased for a third consecutive month in July 2026, the first such sustained rise since June-October 2024. Even so, the total level of trade between the two nations remains far below its pre-2025 tariff war levels.

Between June and October 2024, the combined value of U.S. imports from China and exports to China rose $3.2 billion to reach $55 billion. U.S.-China trade has risen $6.5 billion since April 2026 to total $36.8 billion in July. The value of trade between the U.S. and China during July 2026 is 33% less than it was in October 2024.

These figures are based on the Census Bureau's monthly trade data, which doesn't take any seasonality in the data into account. Applying a trailing twelve month average to the monthly data however confirms the large drop that has occurred in trade between China and the U.S., dropping from $48.4 billion in October 2024 to $31.4 billion in July 2026, a 35% decline.

The following chart reveals how the flow of trade between the U.S. and China has developed from January 2017 through July 2026.

The increase from April through July 2026 comes as U.S. President Donald Trump and Chinese Premier Xi Jinpeng are set to meet to discuss trade and other issues in the U.S. in September 2026. Curiously, the New York Times has chosen to focus on China's dominant trade position with the rest of the world ahead of that summit.

When President Trump and China’s leader, Xi Jinping, meet this month to talk about a fragile trade truce, one issue is sure to dominate: China’s seemingly unstoppable export engine.

Chinese customs data released on Tuesday showed that in August, China sold $119.09 billion more in goods to the world than it bought — the fourth month in a row that the trade surplus topped $100 billion. Exports rose by 25 percent in U.S. dollar terms, while imports climbed 28 percent.

So far this year, the trade gap is already over $800 billion, and economists say it is on track to surpass last year’s $1.2 trillion, a milestone no other country has reached.

According to U.S. data, China's year-to-date trade gap with the U.S. is over $91.2 billion through July 2026, which as the data demonstrates, is much lower than it would have been without 2025's tariff war.

Why then has China's trade position strengthened so much everywhere else? China's domestic economy has struggled to grow during the past year, in part because of its tariff war with the U.S. With domestic demand not able to absorb their production surpluses, Chinese producers have redoubled their exporting efforts to virtually everywhere else in the world. The New York Times recently emphasized the role that China's economic weakness has played in contributing to China's global trade dominance:

The widening trade gap is also a symptom of lackluster demand at home. Consumer spending has been weak, while youth unemployment remains high. In August, China’s imports slowed, even as the country imported more high-tech goods like automatic data processing machines and semiconductors. Foreign car shipments have fallen around 20 percent so far this year as domestic brands dominate the market.

Looking forward, the article also references China's official trade data for August 2026, which is reported about a month before the U.S. data for the same month becomes available. That data indicates China's exports to the U.S. increased, which in turn, suggests the total value of U.S.-China trade increased for a fourth consecutive month.

Image credit: View of Port of Los Angeles with container ships by Downtowngal on Wikimedia Commons. Creative Commons Attribution-Share Alike 4.0 International.

As expected, the value of goods exchanged between the U.S. and China increased in June 2026.

The U.S. Census Bureau reports a combined total of $34.7 billion worth of goods were processed through U.S. ports during the month. Both outgoing exports to China and incoming imports from China increased month-over-month. Exports rose 5% from $9.117 billion to $9.571 billion and imports grew 7% from $23.508 billion to $25.150 billion between May and June 2026.

Year-over-year, the combined value of goods traded between the U.S. and China has increased by 22%. Digging into that number, we find some really lopsided results. The increase of U.S. exports to China accounts for just 2% of the year-over-year increase, while China's exports make up the remaining 98%.

Reports indicate technology goods such as semiconductors, computing hardware, and AI technology components led the increase in China's exports to the U.S. in June 2026. In addition, U.S. firms importing lower-value goods for the upcoming Christmas shopping season had a strong incentive to pull their orders forward 1-2 months earlier than normal, seeking to beat the clock on new U.S. tariffs.

The following chart shows how the flow of trade between the U.S. and China has evolved from January 2017 through June 2026.

June 2026 saw the twelve month trailing average value of goods directly traded between the U.S. and China record its second increase after having registered declines in each month from February 2025 through April 2026. The cumulative total loss of direct trade between the U.S. and China with respect to a counterfactual projection of what that trade would have been without the tariff war between the two nations adds up to $187.4 billion through June 2026.

Image credit: Port of Seattle cranes on a sunny October day by Ron Clausen on Wikimedia Commons Creative Commons CC BY-SA 4.0 Attribution-ShareAlike 4.0 International.

A bottom is now in for trade between the U.S. and China. It might even be *the* bottom for the global tariff war that began in April 2025 but only time will confirm that for sure.

What we do know for sure is that May 2026 saw the first increase in the rolling twelve month average of the value of goods exchanged between the U.S. and China for the first time since January 2025.

There are also indications that trade will continue to increase in the short term. A report out of China hints at what will be happening:

China-US goods trade totaled 2 trillion yuan ($294.1 billion) in the first half of the year, accounting for 7.9 percent of China's total foreign trade, with the second quarter rebounding to 13.7 percent growth after an 18.7 percent slump in the first quarter, a customs official said at a press conference on Tuesday in response to a question about the recent acceleration in Chinese exports to the US and the outlook for bilateral trade in the second half.

A Chinese expert said that the recovery of China-US goods trade in the second quarter, with bilateral trade turning positive after a decline in the first quarter, was mainly driven by improving trade relations and lower US tariff rates, which helped restore market confidence and support trade activity.

The apparent improvement is being acknowledged after President Donald Trump traveled to China to meet with Chinese leader Xi Jinping in May 2026. The relative truce between the two nations in their tariff war so far seems to be holding with Trump restraining trade hardliners in his administration for now.

Meanwhile, other news out of China this month points to a concrete reason behind why trade between the U.S. and China will continue to increase in the next few months:

Chinese exporters gained an advantage as U.S. retailers moved up their orders by four to six weeks to build inventory for Black Friday and Christmas sales ahead of anticipated tariff increases later this year.

Typically, goods shipped to support the Christmas holiday season in the U.S. peak in October 2026. Moving those shipments up by four to six weeks could move the annual seasonal peak to either August or, more likely, September 2026.

On the U.S. side of U.S.-China trade data, the following chart shows the uptick off a bottom for the trailing twelve month average of the value of goods exchanged between the U.S. and China in May 2026, with April 2026 representing a bottom (if not definitively yet *the* bottom):

That bottom also confirms our prediction from last month that "the level of trade between the U.S. and China will bottom in 2026-Q2. It may already have, but we won't get the data to confirm it for at least another month or two."

It looks like it had already happened at that writing!

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 7 July 2026.

Image credit: A close up of Scrabble tiles spelling the words China, USA, and TariffsPhoto by Markus Winkler on Unsplash.

On 2 April 2025, President Donald Trump initiated "Liberation Day" tariffs, imposing substantially higher tariffs on goods being imported into the United States from every nation on Earth. But most significantly, upon China, whose government responded by imposing its own retaliatory tariffs on U.S. exports. A new global tariff war between the planet's two largest national economies was begun.

Since then, trade between the two nations has dramatically fallen off, as metaphorically illustrated in the following video:

The last twelve months has been characterized by falling trade between the U.S. and China. But in April 2026, there was a new development. The level of trade between the U.S. and China, as measured by the trailing twelve month average of the total value of goods exchanged between them, began to bottom. The level of trade is still falling, but much more slowly as trade between the U.S. and China stabilizes at a lower level than it was at the beginning of 2025.

The following chart shows that new development, presenting the monthly data for the combined value of goods exchanged between the U.S. and China along with its trailing twelve month average for the period from January 2017 through April 2026.

We think the level of trade between the U.S. and China will bottom in 2026-Q2. It may already have, but we won't get the data to confirm it for at least another month or two.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 9 May 2026.

The U.S. and China represent the two largest national economies on Earth. Since President Trump's 2 April 2025 "Liberation Day" global tariff announcement, trade between the two nations has plummeted by 39%. Just released data for February and March 2026 however indicates a bottom is forming in the combined value of goods that are being directly exchanged between the two countries.

That's a lot of information to unpack, so let's get to it!

The 39% decline in trade between the U.S. and China represents the percentage difference between the actual combined value of goods traded between the two nations through March 2026 and a counterfactual based on a simple straight-line projection of what a rolling twelve month average of that trade would have looked like had it continued following the same trajectory it was on from March 2024 through March 2025.

The counterfactual projection would have seen the value of US-China trade clock in at $50.3 billion in March 2026. Trade data reported by the U.S. Census Bureau in March 2026 indicates the actual rolling twelve month average of trade between the U.S. and China was $30.7 billion. The following chart shows both the counterfactual projection (the red-dashed line) and the actual rolling twelve month average (the thick solid black line), where the current decline has taken place starting from April 2025.

The chart also shows the rate at which the actual rolling twelve month average is plummeting is starting to slow. That's mainly because the level of direct trade between the U.S. and China is stabilizing at a level between $27 billion and $34 billion per month, as indicated by the actual monthly data (the thinner purple line).

Looking again at the counterfactual and rolling twelve month average data, we estimate the cumulative loss of direct trade between the U.S. and China in the twelve months from April 2025 through March 2026 is $128.1 billion.

To put that level of trade into perspective, economist Gita Gopinath indicates that "China’s share in US imports at 9% is back down to what it was right before China joined the WTO (2001)."

Regular readers will note a change in how we're describing the U.S. Census Bureau's trade data for goods exported to and from the U.S. and China, which we now describe as "direct" trade. That's because of other trade research that finds a lot of trade is still occurring between the U.S. and China, which is being passed through other nations as intermediaries, particularly in southeastern Asia. In effect, the true national origin of those goods is being masked in both the U.S. and China's official trade data as appearing to be going to and from other nations.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 5 May 2026.

Image credit: A large crane beside an empty container ship in Lianyungang, China photo by Bing Zhang on Unsplash.

The United States' top export to China is soybeans. That's why the news the U.S. and China had struck a trade deal at the end of October 2025 was so exciting, because it came with a commitment from China to buy 12 million metric tons of U.S.-grown soybeans.

China's soybean buyers completed their purchases before the end of 2025, the bulk of which were exported in December 2025 and January 2026. But instead of giving a large boost to trade between the two nations, that increase in exports only delivered a small increase over the November 2025 low, with the boost offset by the falling level of trade of other goods.

In February 2026, the boost from the negotiated soybean sales to China ended and the combined value of goods exchanged between the U.S. and China fell to $26.9 billion. That level falls below the 2020 Coronavirus Pandemic low for this data series.

The following chart shows that negative data trend for the monthly value of trade between the U.S. and China.

We had anticipated a larger boost to that overall trade from China's soybean purchases from the U.S., but that impact has proven to be disappointing.

It's clear the level of trade won't return to its pre-2025 tariff war levels anytime soon. The trailing twelve month average of that trade is $18.8 billion below our counterfactual projection of what the level of trade between the U.S. and China would look like in the absence of the trade war between them in February 2026.

That brings the decline in the trailing twelve month average of the direct trade between the U.S. and China to a cumulative loss of $108.5 billion in the value of goods exchanged between the U.S. and China.

Meanwhile, reports indicate China is turning to alternatives to reduce its need to import large quantities of soybeans, which if successful, will negatively impact soybean farmers in both the U.S. and Brazil, the largest exporters of soybeans to China:

At the edge of one of the many pig farms spread across the vast, unbroken floodplains of Taizhou, a two-hour drive northwest of ​Shanghai, a pair of square, four-metre pools of acrid-smelling ochre liquid hold the key to cutting costly soybean use in half.

The pools hold a swill of cheaper, locally sourced ingredients, which ‌can include brans, pumpkin vines and wine lees. But it is fermented - like yogurt - so the proteins are already broken down and easy to digest, lessening the need for the higher-quality proteins in soy, 80% of which China imports....

The government sharply accelerated a drive ​to expand protein sources for livestock in March of last year, just as trade tensions ramped up early into President Donald Trump's second term. Soybeans quickly became a ⁠key bargaining chip.

Reuters interviews with dozens of livestock and feed producers, state researchers and industry experts revealed Beijing is moving faster than previously thought to deploy new technologies and promote fermented feed.

It's the agricultural equivalent of Beijing's campaign to build ​domestic capabilities in microchips and artificial intelligence, catalysed by Washington's stringent controls on advanced technology exports to China.

A permanent loss of soybean exports would further hammer the level of trade between the U.S. and China.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 19 February 2026.

Image Credit: Brown cardboard ampersand concrete statue inside an intermodal container photo by Jan Baborák on Unsplash.

The United States' top export to China is soybeans.

However, with the U.S. and China engaged in a tariff war during most of 2025, soybean shipments plunged all the way to zero from June through October 2025. Following orders from the top of China's government, Chinese firms hadn't even bothered to place any orders to buy U.S. soybeans.

That changed on 30 October 2025. As part of the tariff war truce struck between the two nations, China's government negotiators agreed that Chinese state-controlled firms like Sinograin and COFCO would purchase 12 million metric tons of U.S. soybeans before the end of 2025. The agreement also specified China would buy 25 million metric tons of soybeans in each of the next three years.

China's purchases of 12 million metric tons worth of U.S. soybeans in 2025 was confirmed on 20 January 2026. But because China started placing orders so late, most of the crop they bought was nowhere close to where it could be quickly loaded on oceangoing ships to China. We suspect most of the soybeans bought by China in November and December 2025 were stored closer to where the crops are grown in the American Midwest. The following video shows how soybeans make their way to the Mississippi River, where they are loaded onto barges in the first stages of their export to other nations:

It takes time to transfer soybeans from siloes to trucks and then onto barges. It takes more time for the barges to sail down toward the port of New Orleans, where the soybeans are transferred from the barges to shipping containers and bulk cargo ships. It then takes even longer for the container-laden and bulk cargo ships to sail down to the Panama Canal and cross to the Pacific Ocean, where it then takes another few weeks to arrive at China's ports where they are unloaded.

In November 2025, the U.S. Census Bureau reports the U.S. exported just $21 million worth of soybeans to China. At that month's average spot price of $10.50 per bushel, that works out to be about 56,577 metric tons. In December 2025, the total value of soybeans exported from the U.S. to China jumped to $593.8 million, which at $10.40 per bushel, represents about 1.55 million metric tons of soybeans being shipped.

Altogether, U.S. export data has yet to account for roughly another 10.45 million metric tons of U.S. soybeans bought by China to be exported from the U.S. Assuming the same price of $10.40 per bushel as recorded for December 2025, that's about $4 billion worth of soybeans headed to China that hasn't yet been officially recorded in U.S. export data because it wasn't in place to depart from the U.S. before the end of the year.

As you can see in the following chart, the $593.8 million of soybean exports in December 2025 was enough to reverse a downtrend and start a small upward surge.

We anticipate that new surge will accelerate upward in January and February 2026 as the remaining 10.45 million metric tons of soybeans reaches their ports of exit and begins their long sea voyage to China. When it does, it will amp up U.S. GDP numbers for the first quarter of 2026, just as the absence of U.S. soybean exports in the fourth quarter of 2025 contributed to that quarter's lackluster recorded growth.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 19 February 2026.

"It's tough to make predictions, especially about the future."

That's just one of many bits of wisdom that baseball great Yogi Berra dispensed over his life. But how tough is it to predict what happened in the past?

Let's play a game to find out. We're going to give you a set up involving trade between the U.S. and China so you can guess what actually happened next. And then we'll give you more background information and a chance to change your prediction. Once you've locked in your prediction of what happened in the past, we'll tell you what actually happened.

To play, just scroll down line by line, so you don't get to the answer before you've made your prediction. It's that easy, here we go!

At the start of November 2025, the U.S. and China reached a new truce in their tariff war, which started almost seven months earlier. If you were asked to predict how the total value of goods exchanged between these two nations would proceed to change during November 2025, after the trade deal was reached, which option would you choose?

• The total value of goods exchanged would rise.
• The total value of goods exchanged would stay the same.
• The total value of goods exchanged would fall.

Now, let's throw some extra information for you to consider in making your hypothetical wager. The U.S.-China tariff war significantly reduced the quantity of goods exchanged between the two nations, with the total value of goods plunging to near-2020 pandemic lows in the months ahead of the November 2025 truce. That's a big deal because the months of August and September typically represent the peak of China's exports to the U.S., with consumer goods flowing into the U.S. ahead of the Christmas holiday shopping season. Meanwhile, the months of October and November typically represent the peak of U.S. exports to China, which are dominated by shipments of soybeans following their annual harvest at this time of year.

Does that extra information change your thinking? Or will you stick with your original wager? We'll give you one last moment to decide....

Now that you've made your prediction, the following chart reveals the outcome. Did you make the right call?

The total value of goods exchanged between the U.S. and China fell in November 2025, both month-over-month and year-over-year. The reason why is the tariff war's disruption of trade between the two nations during the preceding months, which shrank the flow of goods in both directions and, more importantly, shrank the orders for the goods that might be exported.

By the time the tariff war truce was struck, the firms that do the actual importing and exporting of products didn't have orders for the goods they would normally be transacting set up, nor did they have any cargo ships lined up to transport them. Even if they had these things ready to go, since it typically takes about three weeks for the physical goods themselves to transit across the Pacific Ocean after the ships are loaded and leave their ports, most of the month of November would not have seen any uptick as a result of the deal. At least, not until the end of the final week of the month in the most optimistic of scenarios.

Now we'll make a prediction about what happens next. We will most likely see a reversal when the trade data for both December 2025 and January 2026 is reported in the months ahead, with a rising level of goods exchanged between the two nations.

What can we say? "The future ain't what it used to be."

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 29 January 2026.

Neon question mark photo by Simone Secci on Unsplash.

Trade between the U.S. and China has been almost fully cut in half since its October 2021 peak. The latest available trade data for October 2025 reveals the combined value of all goods exchanged between the two nations stood at $32.8 billion, which compares with the record peak of $64.7 billion in October 2021.

October is a significant month for U.S.-China trade because U.S. exports of soybeans to China typically peak during the month. In 2025 however, even though China has been buying U.S. soybeans, sales have been muted with the result exports have significantly lagged the typical seasonal boost seen in previous years.

That outcome is a direct consequence of the tariff war between the two nations. Part of China's trade war strategy has been to purchase soybeans from other nations, with Brazil gaining much attention from China's soybean purchasers.

The following chart shows how the combined value of trade between the U.S. and China stands through October 2025 in the context of how trade between the nations has developed since January 2017.

The chart features a counterfactual of how the rolling twelve month average value of goods exchanged between the U.S. and China would have grown in the absence of the global tariff war between the two nations. Through October 2025, we find the gap between that counterfactual and the actual trajectory of U.S.-China trade has opened up to $11.5 billion, with a cumulative loss of $43.4 billion since February 2025.

Looking forward, the U.S. and China reached a one-year trade deal on 1 November 2025. We'll see over the next several months how that deal might change the overall trajectory of the rolling twelve month average. Assuming that deal is not disrupted by President Trump's just-announced 25% tariff on nations trading with Iran because of that nation's repressive government's crackdown against protestors.

All this discussion emphasizes a critical point. Rather than a tool to raise revenue, tariffs have become a tool for addressing geopolitical concerns during President Trump's second term. They've become more than a means of regulating trade.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 8 January 2025.

Image Credit: Close up of a metal container with writing photo by Zalfa Imani on Unsplash.

Delayed trade data has started to flow out from the U.S. Census Bureau. More than a month behind schedule, the latest data on trade between the U.S. and China is for September 2025. As expected, the total value of goods exchanged between the two nations slipped for the second month, falling from $33.4 billion in the previous month to $31.8 billion.

That's a net figure. U.S. exports to China were up from August 2025's level, rising $108 million to $8.38 billion. That gain was offset by a much larger decline in the value of goods exported from China to the U.S. in September, which fell by $1.71 billion to $23.41 billion.

The trailing twelve month average, which smooths out annual seasonality in the trade data, declined to $40.0 billion in September 2025. This figure is $9.6 billion, or 19.6%, below our counterfactual projection of what the level of trade between the U.S. and China would have been during the month in the absence of the global tariff war, had trade between the nations continued growing at the rate it was between March 2024 and March 2025.

The following chart presents the monthly data for the combined value of goods exchanged between the U.S. and China along with its trailing twelve month average in the period from January 2017 through September 2025.

The U.S. and China struck a new truce in the tariff war on 1 November 2025. This new deal lowered tariffs considerably more than their earlier 28 June deal, but we won't see its effect in the data until November 2025's data becomes available early in 2026.

Because of that deal's timing, we anticipate another negative month or two for U.S.-China trade data when October 2025's data is finally reported. Though it has not yet been scheduled, we anticipate that data will become available in the first weeks of January 2026. It's possible it may be reported along with the data for November 2026 as the Census Bureau gets fully caught up.

Despite lacking the full detail of the U.S.' import/export data, we do know that China reported a more-than-$1 trillion surplus in its trade with the world in in year-to-date. This record level was achieved because of China's falling level of trade with the U.S. and because China's domestic economy has struggled to grow during 2025.

That's possible because the ongoing negative impact of the U.S.-China tariff war and China's lack of domestic demand has resulted in Chinese producers having more goods available to export elsewhere. Which they have, because Chinese producers are facing a cash crunch and need the money.

Their actions are becoming a flashpoint in the regions where China is shipping its excess production. In particular, the European Union is threatening to impose new retaliatory tariffs against China's exporters, on top of its recent tariffs on Chinese electric vehicles that have been flooding into the EU.

China's economic situation has worsened enough that China's official government data can no longer conceal it. Here are headlines from 14 December 2025:

• China's Economy Is Deteriorating on Several Fronts
• China's economy stalls in November as calls grow for reform
• Xi Blasts "Reckless" Projects Exaggerating Growth After China Reveals Dismal Macro Data For November

How the imbalances that resulted in these headlines get settled will be one of the bigger economic themes of 2026. Stay tuned!

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 19 November 2025.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon showing Chinese container ships labeled 'Made in China' being diverted with large arrows away from the United States and toward other regions such as Europe, Africa, and South America". Sadly, in the original image produced by this prompt, Copilot didn't produce anything that looked like the actual continent of South America, oddly choosing to instead rename sub-Saharan Africa as "South America". The image still sort-of worked for our editorial purposes after several minor fixes, but we miss South America and urge Copilot to both acknowledge its existence and give the continent its due.

After a strong rebound in July, the combined value of goods traded between the U.S. and China dipped in August 2025. The release of trade data for this month was delayed until 19 November 2025 because of the record 43-day shutdown of nonessential U.S. government functions that ended last week.

Exports from the U.S. to China totaled $8.272 billion, which were down 11% from July's level and down nearly 37% year-over-year. Imported goods shipped from China to the U.S. totaled $25.133 billion, which were down nearly 5% month-over-month and about 31% since August 2024.

The combined value of trade between the U.S. and China for August 2025 is $33.1 billion, a 6.5% decrease from July's showing.

The trailing twelve month average of the combined total of goods exchanged between the U.S. and China continued falling in August. It now falls 15.3% below a counterfactual projection of how the value of trade between the two nations would have grown in the absence of the global tariff war. The following chart presents the monthly data for the combined value of goods exchanged between the U.S. and China. It also presents the trailing twelve month average, which smooths out much of the year-to-year seasonal variation in the trade data in the period from January 2017 through August 2025.

On 1 November 2025, the U.S. and China struck a new truce in their tariff war that lowered tariffs considerably more than their 28 June deal, though we won't see its effect in the data until November 2025's data becomes available early in 2026. In the meantime, we anticipate we'll continue tracking an overall downward trend in trade between the U.S. and China until the trade between the two countries following the deal starts to gain traction.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 19 November 2025.

Image credit: Empty Storage Container photo by Moj Box on Unsplash.

How have tariffs affected the prices of goods sold to American consumers?

Tariffs are, in effect, taxes imposed on goods the U.S. imports from other nations. As such, they can affect prices depending on how much of the tariffs are passed through to consumers. But how much have those prices changed?

A new paper by the Harvard Pricing Lab's Alberto Cavallo, Paola Llamas, and Franco Vazquez explores how President Trump's tariffs have affected the prices of goods being sold in the U.S. using daily pricing data from PriceStats, which was formerly known as the Billion Prices Project.

The following chart, which has been updated with an extra month's worth of data beyond what the authors presented in their paper and which we've annotated, shows how the prices of three categories of goods have changed in the period from 1 October 2024 through 12 October 2025.

Imported goods make up one category, but Cavallo, Llamas, and Vazquez divide domestic goods into two categories: ones that are also affected by tariffs and ones that are not. They describe how they determined what goods fall into each of these three categories:

To better understand the drivers of price changes among domestic goods, we combine information on countries of origin and HS code classifications to identify which products are more affected by tariffs. Barring a few exceptions, all imported goods in our sample are subject to at least the baseline 10 percent tariff. Domestic goods, however, can be differentiated by their degree of indirect exposure.

We classify a domestic good as affected if it either belongs to an HS category directly targeted by the tariffs or falls within a three-digit COICOP category in which more than half of the products are imported. The first criterion captures goods such as those made of steel and aluminum, whose imported counterparts faced explicit tariff rates at the HS level. The second identifies domestic goods in import-intensive consumption categories, where competition with imports affected by country-level tariffs is expected to be strongest.

With that definition set, here's how they describe the various phases of the tariffs covered in the period covered by the data in this chart:

Before the tariffs took effect, two patterns are evident. First, prices for imported goods fell temporarily from late November to early January, reflecting typical holiday discounts in categories such as electronics and household items. Second, both domestic and imported goods exhibited a mild deflationary trend during the initial months. This reflects the matched-model index structure and product composition: many goods, particularly electronics, are introduced at high prices and discounted gradually over time. Because the index does not attempt to link new and old models of similar goods, or apply quality adjustments, these markdowns appear as steady price declines.

We think this is the weakest part of their analysis. Because they focused on President Trump's tariffs, they did not acknowledge the role of the Biden-Harris administration's tariffs and anti-free trade measures that were contributing factors to these trends in this period.

In particular, what they really missed was the actions of importers to frontload (or frontrun) the new tariffs they faced in 2024 and 2025. Here, producers and importers cranked up production and shipping of goods to beat the clock on when tariffs and other trade restrictions would go into effect. These surges in supply, which did not coincide with a matching surge in end-consumer demand, contributed to the decline in consumer prices of imported goods during this period.

The largest decline in import prices took place after the 2024 elections, for which the reelection of President Trump would ensure new tariffs were on the horizon for importers, giving them an additional incentive to resume their frontloading practices. The authors attribute this plunge in import prices to "typical holiday discounts" in this period, but this assertion is not well supported by the data they've made available - we would need to see this assertion supported and quantified by a similar pattern during these months in previous years.

The rest of their analysis is stronger as it fits their primary focus on President Trump's tariff policies:

Four salient patterns emerge from Figure 2, summarizing the main features of the price adjustment. First, retail prices responded almost immediately to major tariff announcements, often within days. After March 4, imported goods prices rose by about 2 percent, while domestic prices increased by roughly half as much. Following the “Liberation Day” announcement on April 2, which introduced a 10 percent baseline tariff on all imports, imported goods continued to rise, whereas domestic prices stabilized. The tariff pause on Chinese goods announced on May 12 led to a quick temporary drop in all prices, while the “letters” escalation in July led to renewed pressures. These rapid reactions suggest that retailers were forward-looking, attentive to tariff news, and adjusted prices in anticipation of expected, rather than realized, import costs.

Second, most of the pass-through is gradual rather than discrete. After the tariffs are implemented, prices followed a new, persistent upward trajectory, marking a clear break from the pre-tariff trends. This suggests that tariffs affected retail prices mostly through a sustained upward pressure rather than a single, discrete jump.

Third, domestic goods were also affected, exhibiting a milder but sustained increase in prices since March. This highlights the broader reach of tariff policies beyond directly targeted imports. Several mechanisms may account for this pattern. Producers and sellers of domestic goods may raise prices in response to reduced competition from foreign goods, particularly in categories where domestic and imported products are close substitutes (Flaaen, Hortacsu and Tintelnot (2020)). Many U.S.-made products rely on imported inputs—such as components, packaging, or raw materials—from tariffed countries (Amiti, Redding and Weinstein (2019)). Additional factors could include efforts to distribute cost increases across product lines, maintain relative price structures, or expectations that higher inflation could increase future costs....

Finally, the magnitude of the price increases appears to be modest relative to some of the tariff announcements. Between March and September 2025, imported goods rose by about 4 percent and domestic goods by 2 percent. Relative to pre-tariff trends, these increases amount to 5.4 and 3 percent, respectively.

Their analysis covers the period through 12 September 2025. Since their paper was released, they've provided additional pricing data for each series through 12 October 2025. That data shows increases in prices for both imported and non-tariff-affected domestic goods, whose price indices are respectively some 2.2% and 1.4% above their 1 October 2024 level. Domestic goods affected by tariffs however have recently seen a marked decline in their prices, and are now just 0.2% above their 1 October 2025 level.

The increase in non-tariff affected domestic goods and decrease in tariff-affected domestic goods provides a good indication that the effect of tariffs on prices is more complex than might be expected. That's because in addition to being complex in how producers and suppliers might choose to pass through the cost of tariffs to consumers, other factors, including things like supply and demand, also affect prices.

Previously on Political Calculations

We regularly cover trade between the U.S. and China. Here's our monthly coverage spanning trade data from early 2024, which describes how imports first fell in response to the Biden-Harris administration's anti-free trade policies and tariffs, then surged as importers sought to beat the clock on new tariffs going into effect in early 2025, then fell again after those tariffs were imposed.

• US-China Trade Decline May Have Hit a Bottom
• Trade Between U.S., China, and Rest of the World Falls in Storm of Anti-Free Trade Policies
• Diverging Trends in U.S. Trade with China and the Rest of the World
• U.S. Trade with World Slowly Recovers as Trade with China Slowly Falls
• US-China Trade Racing to Beat Clock on New Biden-Harris Tariffs
• US Imports Surge as China Beats Clock on Biden-Harris Tariffs
• The State of US-China Trade as New Tariffs Take Effect
• China's Exports Surge as Factories Resume Rush to Beat New Tariffs
• US-China Trade Turns Back Down
• A Trade Story in Charts
• The End of 2024 Sees Surge in Imports to U.S.
• US-China Trade Boosted by Frontrunning
• US-China Trade Slows After Frontrunning Ends
• US-China Trade Drops Ahead of Trump's "Liberation Day" Tariffs
• US-China Trade Plunges at Start of New Tariff War
• US-China Cargo Trade Sinks as 2025 Tariff War Takes Toll
• Negative Impact of US-China Tariff War Deepens
• U.S.-China Trade Rebounds on Boost from Chinese Exports of Rare Earths

References

Alberto Cavallo, Paola Llamas, and Franco Vazquez. Tracking the Short-Run Price Impact of U.S. Tariffs. [Ungated PDF Document]. 27 October 2025.

Cavallo, Llamas & Vasquez (2025). Domestic Goods in Affected and Unaffected Categories. [CSV data]. Updated 12 October 2025.

Image credit: Wooden blocks spelling tariffs on a table photo by Markus Winkler on Unsplash.

As expected, the total value of trade between the U.S. and China perked up in July 2025 following a deal struck between the U.S. and China at the end of June 2025 for rare earth materials.

The increase in Chinese exports to the U.S. more than made up for a small decline in U.S. exports to China during July 2025. The value of U.S. exports to China dipped by 1.5% from June's level to $9.298 billion as China's exports to the U.S. surged 39.4% to reach $26.411 billion.

The trailing twelve month average of the combined total of goods exchanged between the U.S. and China continued falling in July. It now falls some 12% below a counterfactual projection of how the value of trade between the two nations would have grown in the absence of the global tariff war. The following chart presents the monthly data for the combined value of goods exchanged between the U.S. and China along with its trailing twelve month average, which smooths out the year-to-year variation in the trade data in the period from January 2017 through July 2025.

Although the trend represented by the trailing twelve month average continued falling, the July 2025 surge in Chinese exports to the U.S. caused its decline to decelerate.

In the absence of a larger deal to significantly lower the tariffs both nations have imposed on each others goods to date however, we anticipate the trend will continue downward.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 5 September 2025.

Image credit: Rare earth oxides photo by Peggy Greb, USDA Agricultural Research Service. Public Domain image.

As expected, June 2025 was another devastating month for trade between the U.S. and China.

The high tariffs U.S. President Donald Trump and China's Communist Party General Chairman Xi Jinping have imposed on each other's goods since President Trump initiated them on the 2 April 2025 "Liberation Day" event ensured that outcome. The combined value of goods exchanged between the U.S. and China totaled $28.4 billion in June 2025, which was slightly up from the $27.0 billion figure recorded in May. June 2025's combined trade is 37.5% below the equivalent figure reported a year earlier for June 2024.

U.S. exports to China rebounded from May 2025's dismal level to fall by just 16.6% year-over-year, while China's exports to the U.S. plummeted by 44.5%.

That doesn't take the seasonal variation of trade between the two countries into account. The following chart presents the monthly figures for the combined value of goods exchanged between the U.S. and China along with the trailing twelve month average, which smooths out the year-to-year variation in the trade data.

The chart also features a counterfactual projection illustrating what the trailing year average would look like had the new tariff war between the U.S. and China not taken place. In the three months since it erupted, we find the actual trajectory of U.S.-China trade is 9.0% below the levels it would reasonably have been expected to be without it. In the absence of trade deals, this difference will continue growing while older data in the rolling average falls off and is replaced by newer, lower trade data.

Next month's data may see the trade figures perk up because of the deal struck between the U.S. and China at the end of June 2025 for rare earth materials. In the absence of a larger deal to significantly lower the tariffs both nations have imposed to date however, we anticipate the trend will continue downward. There are signals Xi and Trump will meet to finalize a deal, but at this writing, no deal has yet been reached.

We do have growing evidence of the extent to which 2025's U.S.-China tariff war is negatively impacting China's economy, which we'll cover in the very near future.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 5 August 2025.

Image credit: U.S. President Donald Trump alongside General Secretary of the Chinese Communist Party Xi Jinping on 8 November 2017 by Shealah Craighead on Flickr. Creative Commons Public Domain Mark 1.0 Universal Deed.

Coming up with a good metaphor to describe the state of international trade between the U.S. and China to base an editorial cartoon and headline around is challenging. Here a few of the contenders we considered for this article:

• US-China Trade Falls through the Floor in 2025 Tariff War's Second Month
• US-China Trade Plummets as 2025 Tariff War Impact Deepens
• US-China Cargo Trade Sinks as 2025 Tariff War Takes Toll

We thought the third option provided the best visual potential and went with it. But we could easily have run with any of the others, because they all work.

For example, trade between the U.S. and China did indeed fall through a floor in May 2025. Specifically, the total value of goods exchanged between the U.S. and China plunged below 2020's pandemic era low in the second month of the new tariff war between the two nations.

Trade between the U.S. and China did indeed plummet. We calculated the year-over-year growth rate for U.S. exports of goods to China and U.S. imports of goods from China and found both plunged by 40-41%. That's the second-lowest drop recorded in any month in trade between the two nations since January 1985, a period that covers the nearly entire modern era of trade between the U.S. and China when trade expanded as China's economy was restructured.

Meanwhile, May 2025 saw the total value of trade between the U.S. and China sink to its lowest level on record since the first quarter of 2009, when this measure bottomed during the so-called Great Recession.

The following chart presents the monthly figures for the combined value of goods exchanged between the U.S. and China with the trailing twelve month average and counterfactual projection of the trailing twelve month average through April 2025.

The chart also shows the growing deviation between the trailing twelve month average of the combined value of trade between the U.S. and China and our counterfactual projection of what that trajectory would look like had 2025's tariff war not happened. As expected, the shortfall between the no-2025 tariff war projection and the trailing year average grew.

The magnitude of the year-over-year decline and its impact in certain industries was such that it provided a huge incentive for the U.S. and China to strike a trade deal, which they announced and confirmed on 27 June 2025.

That event didn't occur until near the end of June 2025, so we anticipate another month in which devastating trade figures will be reported.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 3 July 2025.

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of two half-full cargo container ships, one from the U.S. and the other from China, both of which have sprung leaks and are sinking".