China Export Growth Slows Amid Iran War and U.S. Tariffs

China's export growth slowed to 2.5 percent in March 2026, a five-month low following a 21.8 percent expansion in January and February. The Government of China attributes the decline to global energy shocks and supply chain disruptions caused by the war in Iran, including the closure of the Strait of Hormuz. While imports surged 27.8 percent due to rising energy prices, exports to the United States fell 26.5 percent following elevated tariffs imposed by President Donald Trump.

Despite the slowdown, China's economy likely expanded by 4.8 percent in the first quarter of 2026, aligning with the government's annual growth target of 4.5 to 5 percent. This growth was supported by AI-driven demand for semiconductors and a 140 percent year-on-year increase in electric and hybrid vehicle shipments in March. Exports to the European Union and Southeast Asia rose by 8.6 percent and 6.9 percent, respectively.

Domestic challenges persist, including a property market debt crisis and weak internal demand. To address trade tensions and economic stability, President Donald Trump is scheduled to visit Beijing in May to meet with President Xi Jinping, a trip previously delayed by the conflict in Iran.