China’s export growth slowed to a three-month low in May as US tariffs slammed shipments, while factory-gate deflation deepened to its worst level in two years, heaping pressure on the world’s second-largest economy on both the domestic and external fronts.

US President Donald Trump’s global trade war and the swings in Sino-US trade ties have in the past two months sent Chinese exporters, along with their business partners across the Pacific, on a roller coaster ride and hobbled world growth.

Underscoring the US tariff impact on shipments, customs data showed that China’s exports to the US plunged 34.5 per cent year-on-year (YoY) in May in value terms, the sharpest drop since February 2020, when the COVID-19 pandemic upended global trade.

Total exports from the Asian economic giant expanded 4.8 per cent year-on-year in value terms last month, slowing from the 8.1 per cent jump in April and missing the 5.0 per cent growth expected in a Reuters poll, customs data showed on Monday, despite a lowering of US tariffs on Chinese goods which had taken effect in early April.

Lynn Song, chief economist at ING, said there was still front-loading of shipments due to the tariff risks, while the acceleration of sales to regions other than the US helped to underpin China’s exports. Imports dropped 3.4 per cent YoY, deepening from the 0.2 per cent decline in April and worse than the 0.9 per cent downturn expected in the Reuters poll. Exports had surged 12.4 per cent YoY and 8.1 per cent in March and April, respectively, as factories rushed shipments to the US and others to avoid Trump’s hefty levies on China.

While exporters in China found some respite in May as Beijing and Washington agreed to suspend most of their levies for 90 days, tensions between the world’s two largest economies remain high and negotiations are underway over issues ranging from China’s rare earths controls to Taiwan.

China’s May trade surplus came in at $103.22 billion, up from the $96.18 billion the previous month.

Other data, also released on Monday, showed China’s imports of crude oil, coal, and iron ore dropped last month, underlining the fragility of domestic demand at a time of rising external headwinds.

Beijing in May rolled out a series of monetary stimulus measures, including cuts to benchmark lending rates and a 500 billion yuan low-cost loan program, aimed at cushioning the trade war’s blow to the economy.