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China's exports jumped 12.4% in March compared to a year earlier, as businesses rushed to ship goods before new US tariffs take effect, according to official customs data released Monday.

The export surge, the largest since October 2023, comes amid mounting trade tensions between the world's two biggest economies.

Imports, on the other hand, fell by 4.3%, highlighting weak domestic demand. Analysts had expected a smaller rise in exports and a gentler drop in imports, but the sharp swing reflects growing uncertainty over future trade with the United States.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, warned that the growth won't last. "Exports will likely weaken in coming months as the US tariffs have skyrocketed," he said, predicting supply chain disruption and possible inflation in the US due to shortages.

According to CNBC, the Trump administration has imposed a total of 145% in tariffs on Chinese goods, including a 20% duty linked to China's alleged role in the fentanyl trade.

In response, Beijing has hit back with 125% tariffs on American products and restrictions on exports of key minerals, like those used in electric vehicle manufacturing.

China's Exports to US Surge Despite Tariffs

Despite the heavy tariffs, China's exports to the US rose by 9.1% in March, while imports from the US dropped 9.5%. The US remains China's largest individual trading partner, making up around 10% of its total trade.

The rush to export has led to a spike in shipments of electronics and high-tech products. Exports of semiconductors climbed over 25%, and rare earth materials rose by 20% compared to last year, BusinessTimes said.

These increases contrast with falling exports of lower-value goods like clothes and shoes.

To ease supply shortages, the US government on Friday temporarily lifted tariffs on some electronics, including smartphones, laptops, and semiconductors. These products made up nearly $174 billion in US imports from China in 2023.

Still, businesses are cautious. "Even if firms decide to relocate their supply chains, it takes time to build factories," Zhang explained.

China is now looking to expand trade with other regions. Exports to Southeast Asia rose 11.6%, with a 19% jump in shipments to Vietnam. Exports to the EU rose 10.3%, while imports from the bloc fell 7.5%.

Chinese officials have promised to keep markets open despite the tensions. Customs spokesperson Lyu Daliang called China's market "a great opportunity for the world," and noted the country still has "huge space" for import growth.

With China's first-quarter GDP figures expected this week, pressure is mounting on the government to boost spending and revive the economy.

Investment banks, including Goldman Sachs, have cut China's 2024 growth forecast to 4.0%, down from an earlier estimate of 4.5%, citing the deepening trade dispute.

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