Chinese imports fell under Trump, and it’s happening again

The claim that Chinese imports fell under Trump is not just a retrospective from 2018–2020; it’s a live description of 2025. The observable pattern now closely echoes the first term: a policy shock, a front-loaded inventory response, then a measurable downshift in direct U.S. sourcing from China as firms redistribute orders to Mexico and Southeast Asia. By mid-2025, China’s share of U.S. imports had fallen to roughly 12 percent—nearly halving from its 2018 peak—while the bilateral goods gap narrowed materially versus the late-2010s highs.

This second-round decline is occurring under a different policy architecture. In April 2025 the White House imposed a universal reciprocal tariff baseline, with authorities to ratchet rates higher for large-deficit counterparties; subsequent orders have refined those settings. The architecture sits on top of the Section 301 scaffolding that the U.S. Trade Representative reinforced in 2024 by raising tariffs in strategic sectors such as EVs, batteries and solar components. In aggregate, think of the regime as a layered tariff stack—universal base, country-specific uplifts, and sector-specific add-ons—designed to be adjustable at short notice.

Observed behavior aligns with that design. Monthly census data show U.S. goods imports from China stepping down through the spring after the new baseline took effect: from about $41.6 billion in January to $25.4 billion in April and $18.9 billion by June, with the June bilateral deficit shrinking to roughly $9.4 billion as exports to China ticked up. That is the old pattern resurfacing: a pre-tariff stock-up ahead of the holiday cycle, then a retrenchment once duties bite.

Stated policy versus observed action is the right lens here. Policymakers frame the universal tariff as an instrument to “rectify” persistent deficits; firms, meanwhile, are treating it as a variable surcharge that must be designed around. In practical terms, the “design” has been to re-route final assembly and consolidate origin in friendlier jurisdictions. Mexico has been the primary beneficiary. Its share of U.S. goods imports rose from the mid-teens in the late 2010s to the mid-teens with a higher numerator—enough for Mexico to eclipse both Canada and China as the top U.S. trade partner by 2023 and sustain that position into 2025.

The historical comparison matters, but this cycle diverges in two ways. First, the tariff ceiling is higher and more comprehensive than in 2018–2019, when coverage and average rates ramped in waves. Institutions tracking effective rates now estimate a much steeper post-January 2025 step-up, with average U.S. tariffs on Chinese exports surpassing prior peaks and coverage essentially universal. Second, the enforcement perimeter has widened: anti-dumping and countervailing determinations in key components from Southeast Asia are closing a path that previously softened the first-term shock. That induces a more complicated re-sourcing calculus for multinationals than the first time around.

Market microstructure tells the same story at the ports. Container flows were pulled forward into early summer as retailers front-loaded inventories ahead of tariff resets; Los Angeles processed a record July as buyers “beat the hike,” then signaled a flatter peak season, consistent with a demand that has already been met and a policy cost that is now embedded. This is the textbook signature of a policy shock being internalized by supply chains.

Cross-border interpretation is straightforward. In Singapore and across ASEAN, the first response has been capacity allocation rather than greenfield capex: factories increase second-shift utilization to absorb diverted orders while boards delay larger commitments until the transshipment rules settle. In the Gulf, sovereign logistics assets from Jebel Ali to King Abdullah Port are pricing higher compliance services into their value proposition, anticipating U.S. scrutiny of rules-of-origin claims. The common denominator is that “China-plus-one” is no longer simply diversification—it is compliance engineering.

That compliance dimension has teeth. Washington’s messaging now explicitly targets transshipment and parts-content gaming, with headline rates threatened for goods deemed to have insufficient “substantial transformation.” Even if immediate penalties have been staggered to avoid an abrupt shock to U.S. import prices, the credible threat changes behavior ex-ante. Firms are documenting origin more tightly, trimming China-sourced content, and re-sequencing bills of materials so that qualifying value-add happens outside the PRC. The legal definition of transformation will do as much to redirect trade as the tariff schedule itself.

For policymakers, the macro accounting is nuanced. The overall U.S. goods and services deficit has oscillated with domestic demand and energy price dynamics; month-to-month prints now show imports sagging into early summer as the tariff shock washed through, trimming the three-month average deficit even as the year-to-date gap remains wider than 2024. The bilateral deficit with China has compressed more visibly in recent months as direct imports fell and exports stabilized—again, consistent with the earlier cycle. But narrowing a bilateral gap by re-routing trade is not the same as re-industrialization; it is a relocation of the customs line, with macro balances driven by savings-investment dynamics rather than tariff arithmetic.

For institutional allocators, the question is less about whether this is “decoupling” and more about how sticky the new routing becomes. Mexico’s gains look more durable than Vietnam’s in heavy categories, given proximity, USMCA rules, and scale in autos and appliances. Southeast Asia’s gains, by contrast, are more exposed to anti-circumvention findings in sectors like solar, where Commerce has already tightened. The likely equilibrium is a three-ring network: “China for China” in sensitive tech and consumer hardware, “Mexico for America” in mid-complexity durables and components, and “ASEAN for diversification”—with thinner margins to reflect compliance overhead.

Capital posture is adjusting accordingly. Sovereign and pension capital that leaned into “China-plus-one” in 2020–2022 is now upgrading that thesis into targeted compliance platforms: origin-tracking software, specialized trade credit for re-tooled suppliers, and brownfield expansions tied to USMCA content thresholds. The investable opportunity is less about displacing China outright and more about monetizing the friction that policy is intentionally creating. Logistics operators that can verify origin and assure audit-ready documentation will capture premium yields even in a softer volume environment. Meanwhile, export-credit agencies and development banks in ASEAN will find themselves negotiating carve-outs and content thresholds on a deal-by-deal basis; the financing terms will increasingly encode trade-law risk into cost of capital.

None of this renders the original cost question irrelevant. Higher effective tariffs are, in the near term, a tax on U.S. consumption and intermediate inputs. Downstream price effects will be lumpy—muted where substitution is easy, sharper where Chinese dominance persists. Batteries and certain EV components sit in the latter category, meaning disinflation tailwinds from goods may be blunted at the margin even as headline import volumes shift. The politically salient part is less the CPI print than the distribution: small importers without in-house compliance will face higher unit costs than scaled retailers that can redesign origin at pace.

Historically, this pattern of first-term shock and second-term reinforcement would end with a negotiation that trades tariff relief for concessions. The White House’s present posture, however, treats the tariff stack as an enduring instrument of national industrial strategy rather than a bargaining chip. That reframe matters for corporate planning cycles. If the default assumption is permanence with periodic recalibration, boards will proceed to codify Mexico/ASEAN capacity as baseline rather than contingent. A thin “snapback” clause may remain in supplier contracts for a future détente, but the capex will have moved.

For Singapore and Hong Kong, the financial-hub implication is therefore straightforward: compliance services, trade finance with origin verification, and supply-chain insurance are set to compound as fee pools. For the GCC, the angle is more about leveraging free-zone regimes to capture high-value assembly that meets U.S. rules-of-origin while serving Europe and Africa from the same footprint. In both regions, the opportunity is to be the neutral plumbing for a world that is intentionally less frictionless.

What does this signal? First, that tariff policy has matured from episodic shock to system setting; the “universal baseline + targeted uplifts” model is not an experiment but the new chassis. Second, that the phrase “Chinese imports fell under Trump” describes a structural re-routing rather than a short-term political headline; the recurrence in 2025 confirms that firms now plan around tariff regimes, not through them. Third, that the investable edge sits in engineering compliance at scale—origin, content, and counter-evasion—not in chasing one-off arbitrage.

Policy can and will be adjusted, but the institutional message is clear: treat the tariff stack as durable. Markets will digest the move. Sovereign allocators already have.