Direct trade between China and the United States continues shrinking, new U.S. government data showed. The figures come ahead of a planned leaders’ meeting in Beijing next month, where both sides are expected to explore ways to stabilize relations after a period of renewed economic strain. The February international trade data by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis showed one of the lowest monthly goods deficits with China in two decades at USD13.1 billion in February, continuing a sharp decoupling trend. This is marginally up from January’s revised USD12.7 billion, but remains historically low. In a press release marking the one-year anniversary of Liberation Day, when U.S. President Donald Trump imposed hefty tariffs on all trading partners, the U.S. Trade Representative’s Office highlighted China as a stand-out example of an improving bilateral trade balance. The goods trade deficit with China declined by 30% in 2025, “creating more balanced trade between the world’s largest economies”. Last year the figure dropped to USD202.1 billion – the lowest level since the early 2000s. In February, China exported USD21.6 billion worth of goods to the U.S., while purchasing USD8.5 billion in American products.
The data reflects years of elevated U.S. tariffs and an aggressive “China Plus One” strategy. However, both sides are currently in high-stakes discussions to establish a “Board of Trade” – a framework aimed at a “managed trade” model where purchase commitments ensure a more balanced exchange. U.S. Trade Representative Jamieson Greer, who met with Vice Premier He Lifeng last month in Paris for trade negotiations, noted that the administration is pushing for structural changes. “The United States is ready to sell Boeing aircraft, advanced medical devices, pharmaceuticals and agricultural products. In return, we are willing to remain a market for low-tech consumer goods, provided the playing field is leveled,” he said in an interview with Bloomberg. In February, U.S. consumer goods imports rose by USD2.2 billion, and imports for pharmaceutical preparations witnessed a surge of USD1.0 billion. While China’s share of consumer electronics has declined, it remains a key supplier of pharmaceutical ingredients.
Last week, President Trump signed a proclamation imposing a default 100% duty on patented pharmaceuticals and their associated ingredients, in a bid to onshore production. This would affect Western companies that rely on Chinese-made inputs unless they relocate manufacturing to the U.S. With China ranked fourth as a source of the U.S. trade deficit, much of the displaced trade has been diverted rather than eliminated. Asian and Latin American economies continue to absorb redirected flows from Chinese manufacturers seeking to bypass U.S. restrictions. Taiwan has emerged as the U.S.’ largest source of trade deficit, reaching USD21.1 billion, driven largely by surging demand for advanced semiconductors. This marks a sharp increase from USD17.3 billion in January and nearly triples the USD6.9 billion deficit recorded in February 2025, underscoring the growing reliance on Taiwan’s chip exports, the China Daily reports.
