This article first appeared on GuruFocus.
Chinese exports are holding their ground in Donald Trump’s renewed trade war, defying expectations that 55% tariffs would slow the flow of goods. Six months in, roughly $1 billion worth of products is still crossing the Pacific every day. Despite a 17% slide in total trade this year, China shipped about $317 billion in goods to the US, according to customs data. Bloomberg economists Chang Shu and David Qu said China’s grip on global supply chains gives it short-term leverage, as shifting production away from the country could take years. That strength is helping Beijing maintain momentum ahead of fresh tariff negotiations, with its third-quarter trade surplus rising to $67 billion.
Underneath the headline numbers, some product categories are quietly expanding. E-bike exports have stayed near $1.2 billion so far this year, while e-cigarette shipments are climbing, showing that American consumers remain hooked on Chinese manufacturing even at higher costs. Refined copper cathode exports surged to $270 million in the latest quarter, and electrical cable shipments jumped 87% to $405 million. Zhaopeng Xing, senior strategist at ANZ, said the persistence of these flows could reflect tariff workarounds like routing goods through third countries such as Mexico or Vietnam. Bloomberg analysis also shows about $8 billion worth of smartphones, tablets, and computer parts still reached the US in the third quarter, underscoring the limits of tariff deterrence.
Yet cracks in the system are showing. Shipments of gaming consoles and TVs have plunged as companies like Nintendo (NTDOY) and Microsoft (NASDAQ:MSFT) reroute production to avoid extra costs. Total Chinese exports to the US, now under $320 billion, are back near 2017 levels before the first Trump-era trade war. The International Monetary Fund warned that decoupling between the two economies may be happening faster this time. Still, Trump told reporters he expects a good deal with Xi Jinping during next week’s summit in South Korea even as both leaders test how much separation their economies can realistically withstand.