China Escalates Trade Tensions With New Measures Against U.S.

China’s trade surplus widened to USD 112.5 billion in July 2026, up from USD 97.70 billion a year earlier and exceeding forecasts of USD 107 billion, as exports grew more than expected. Exports jumped 23.9% yoy to USD 397.85 billion, driven by strong demand for AI-related technology products and a rush by manufacturers to ship goods to the US ahead of potential new tariffs. The US applied a new 12.5% levy on Chinese products in late July, replacing a temporary 10% levy that had lapsed. Exports of semiconductors almost doubled in value terms from last year, and overall high-tech product exports soared 40.7%. Meanwhile, imports rose 27.7% yoy to USD 285.35 billion, easing from a 36% jump in June. China’s trade surplus with the US declined to USD 28.03 billion in July from USD 28.9 billion in June. In the first seven months of 2026, China’s trade surplus reached USD 687.37 billion, up from USD 683.5 billion a year earlier, with exports and imports rising 18.5% and 26.7%, respectively.

China unveiled new countermeasures against the U.S., tightening export controls on drones bound for the U.S. and banning transactions with six American firms. The move, framed as retaliation for fresh U.S. restrictions, comes ahead of a planned September meeting between Presidents Xi Jinping and Donald Trump, despite recent signs of thaw following May talks in Beijing. The measures respond to the U.S. Federal Communications Commission's ban on imports of Chinese drones and the Department of Homeland Security's addition of 43 Chinese firms to the Uyghur Forced Labor Prevention Act entity list. The Commerce Ministry accused Washington of “seriously violating consensus” reached by the two leaders and “severely damaging China’s legitimate rights. It urged the U.S. to reverse course and warned further measures could trigger additional sanctions.

China’s trade surplus widened to $125.62 billion in June 2026, up from $113.84 billion a year earlier and exceeding forecasts of $121 billion. This marked the second-largest monthly surplus on record, as both exports and imports grew more than expected, fueled by soaring chip prices and global demand for AI data center hardware. Exports surged 27% to a record $412.39 billion, while imports jumped 36%, the fastest increase in five years, to an all-time high of $286.76 billion. China’s trade surplus with the US rose to $28.9 billion in June from $26.02 billion in May. The surplus with Germany more than doubled year-on-year, and with the EU, it widened by 27% to a record $32.9 billion. In the first half of 2026, China’s trade surplus reached $575.98 billion, down from $586 billion a year earlier, as exports rose 17.6% while imports grew at a faster pace of 26.6%.