The combined value of goods exchanged between the U.S. and China was $40.8 billion in March 2025. That is the lowest figure recorded by the U.S. Census Bureau outside of 2020's Coronavirus Pandemic since March 2016.
The volume of trade has dropped off significantly since January 2025, which marked the end of a period of frontrunning (or frontloading) imports and exports between the two nations. The timing of the end of the frontrunning of goods coincides with two major factors. First, several trade restrictions and higher tariffs imposed by the Biden administration went into effect in January 2025, extending its worse than the first Trump administration's track record. Second, the incoming Trump administration had signaled it would take a more aggressive approach to trade with China and also with the rest of the world.
President Trump rolled out those measures in the form of elevated tariffs after markets closed on 2 April 2025, which he branded as "Liberation Day". The March 2025 trade data marks the end of a period in which those new, higher tariffs did not exist.
To measure their impact going forward, we need to create a counterfactual trend, which would represent how trade between the U.S. and China would have grown in their absence. For that, we've developed a linear regression based on the trailing 12-month average of the combined value of goods traded between the U.S. and China from March 2024 through March 2025. The trailing 12-month average data lets us smooth out much of the seasonal variation in this data to better track overall trends over time.
We've presented that new counterfactual of what the monthly level of trade between the U.S. and China would look like in the absence of the global tariff war in the following chart, projecting it through January 2029.
This method of projecting a counterfactual is different from the counterfactuals that we've previously presented in this ongoing series, which were based on how trade recovered between the two nations after the 2008-09 Great Recession. Here, because we're not dealing with a recoveries in trade after it bottomed, we're instead taking advantage of a different pattern that prevails in historic data. The level of trade between the U.S. and China tends to follow a linear trajectory outside of periods of transition, such as the onset of recessions and recoveries, and other events such as tariff wars and pandemics.
Given the magnitude of the announced U.S. tariffs and China's retaliatory tariffs, we expect a dramatic departure when we first present the trade data for April 2025 after it becomes available in June 2025.
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 6 May 2025.
Image Credit: Blue cranes over an empty slip for a container ship at the Port of Los Angeles photo by Steve Saunders on Unsplash.
Labels: trade
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