China’s customs administration published its August trade figures today, and they are difficult to reconcile with the expectation that tariffs would substantially reduce Chinese exports.

Exports rose sharply year on year, and the monthly trade surplus came in at around $119.1 billion. The cumulative surplus for the year has passed $800 billion. Analysts at ING and BNP Paribas, quoted in coverage of the release, read the figures as indicating that the initial tariff shock has largely been absorbed.

What “absorbing” a tariff shock means

A tariff raises the price of a good entering a particular market. Several things can happen next, and they are not mutually exclusive.

Exporters can redirect goods to markets without the tariff. Trade data over the past two years has shown Chinese exports growing strongly to Southeast Asia, Africa and Latin America, which is consistent with redirection. Supply chains can be rerouted, with components shipped for final assembly in a third country and exported from there — legal in most configurations, and a persistent source of dispute about where a product is really from. Exporters can also cut prices to hold market share, absorbing the tariff in their own margins, which preserves volume at the cost of profitability.

Headline export figures cannot distinguish between these. A number showing exports up tells you the goods moved; it does not tell you at what price or to whom, and both matter for judging whether the policy worked.

The argument about what the surplus shows

A surplus above $800 billion for the year is enormous by any historical standard, and it is read in two quite different ways.

One reading treats it as a demonstration of manufacturing competitiveness: China makes things the world wants at prices others cannot match, and tariffs have not changed that. On this view the surplus reflects capability, and attempts to tariff it away were always likely to fail.

The other reading, made by economists who study China’s domestic economy, treats a very large surplus as a symptom rather than a triumph. A country running a surplus of this size is producing far more than it consumes, which points to weak domestic demand. On this account, exports are doing work that household consumption is not, and the surplus is evidence of an imbalance the government has repeatedly said it wants to correct.

Some support for the second reading is visible in policy. Beijing has reportedly injected around $54 billion into state banks, a move generally associated with supporting lending and shoring up domestic financial conditions rather than with an economy running comfortably.

Why the timing matters

A meeting between the Chinese and American presidents is expected before the end of September. Trade figures released weeks beforehand become part of the negotiating environment, and both sides can use them.

Beijing can point to them as evidence that tariff pressure has not worked and that there is little to be gained by continuing it. Washington can point to the same surplus as evidence of exactly the imbalance the tariffs were intended to address, and argue that the case for pressure is unchanged. The number is the same; the argument built on it is not.

Cautions for the reader

Two, both standard for trade data.

Year-on-year comparisons depend heavily on the month being compared against. A weak month a year earlier produces a striking percentage this year without much having changed in absolute terms, and a single month’s figures are volatile in any case. The trend over several months is more informative than any one release.

And bilateral trade statistics have long been known to disagree between the countries reporting them, because of differences in how transhipment, re-exports and valuation are counted. Two governments can describe the same flows and produce materially different figures without either falsifying anything.

Sources

• General Administration of Customs of China, August 2026 trade data, released 8 September 2026
• Investing.com and Reuters coverage of the release, including commentary from ING and BNP Paribas
• Reporting on Chinese state bank recapitalisation measures
• Standard references on the measurement of bilateral trade balances and re-exports