China’s factories have been hit by their sharpest drop in foreign demand since the Covid-19 depths after the White House’s latest tariff broadside, sending tremors through global supply chains and prompting fresh calls for Beijing to unleash stimulus. Government data released on Wednesday showed the official Purchasing Managers’ Index fell to 49.0 in April from 50.5, while the sub-index for new export orders slid to 44.7—its weakest reading since 2022. Any figure below 50 signals contraction.
How tariffs triggered the plunge
Economists link the slump directly to President Trump’s decision this month to impose blanket 10% duties on all U.S. imports and punitive rates up to 145% on Chinese goods—the steepest barriers in a century. Retailers, fearing price spikes, have cancelled orders en masse. Maritime consultancy Drewry estimates U.S. containerised imports from China could tumble 40% if two-thirds of the levies remain, cutting global box traffic for only the third time since records began in 1979.
Beijing’s response
China’s commerce ministry accused Washington of “weaponising interdependence” and vowed “necessary counter-measures.” President Xi Jinping urged developing nations to “reject economic coercion.” Behind the rhetoric, officials are drafting a fiscal package centred on infrastructure bonds and export tax rebates, according to policy advisers speaking on condition of anonymity.
What the numbers say
| Indicator | Apr 2025 | Mar 2025 | Comment |
|---|---|---|---|
| PMI – Manufacturing | 49.0 | 50.5 | 16-month low |
| New export orders | 44.7 | 49.0 | Lowest since Apr 2022 |
| Container-volume outlook (Drewry) | −1% | +2% | Third annual fall since 1979 |
“Tariff front-running cushioned March output, but that sugar rush is gone,” said Julian Evans-Pritchard of Capital Economics, warning the drag will intensify over summer as U.S. retailers work through bloated inventories.
Global ripple effects
- Electronics — Foxconn has asked suppliers to shift at least 15% of iPhone assembly to India and Vietnam.
- Metals — Copper futures in Shanghai fell 4% on fears of weaker smelter demand.
- Shipping — Hapag-Lloyd says one-third of China-to-U.S. bookings for June have already been cancelled.
Outlook
Bloomberg Economics estimates each 10-point drop in China’s export-order index knocks 0.3 percentage points off GDP growth; on that basis, April’s plunge could shave nearly one point from Beijing’s 2025 target of “around 5%.” Analysts expect the central bank to cut reserve requirements before end-May, but few think policy alone can offset a trade shock of this scale.
“Until the tariff tide turns, China will be swimming against a very strong current.”
With export orders at pandemic-era lows and tariff tensions high, policymakers face a stark choice: accelerate stimulus or risk deeper contraction in the world’s second-largest economy.