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.
Labels: trade
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