China Admits Trump Tariffs Taking a Toll on Its Economy

by Melissa O’Rourke

China’s economy showed signs of weakening in July, with Beijing openly acknowledging that U.S. tariffs are taking a toll, multiple outlets reported Friday.

Official data from Beijing released Friday showed industrial output, retail sales and investment all fell short of expectations, while unemployment ticked up, according to Bloomberg. The slowdown is unfolding amid ongoing trade negotiations with the Trump administration, putting pressure on China’s export-driven economy.

“The international environment in July was complex and severe, with the continued impact of trade protectionism and unilateralism,” said Fu Linghui, the spokesman and chief economist of China’s National Bureau of Statistics, according to The New York Times.

Factory production rose just 5.7% year-over-year, down from 6.8% in June, while retail sales growth dropped to 3.7%, the slowest pace so far in 2025. Unemployment climbed to 5.2% as millions of recent college graduates struggled to find work.

The veracity of China’s official statistics has long been questioned, suggesting the actual extent of the economic slowdown may differ from the reported figures.

The U.S. and China reached a temporary trade truce in May, which was extended by another 90 days on Monday. The agreement has prevented U.S. tariff rates from returning to levels of over 100% seen in April.

Still, the current 30% rate on Chinese goods remains higher than the tariffs imposed during the Biden administration. Moreover, the Trump administration has cracked down on longstanding tariff loopholes Beijing has utilized, including the “de minimis exemption,” which allowed low-value goods to enter the U.S. duty-free, and the transshipment of goods to third countries to circumvent U.S. trade restrictions.

Chinese exports rose 7.2% year-over-year, but shipments to the U.S. fell 22% in July compared to the same period last year. The Chinese government has also deliberately slowed certain industrial sectors to curb “overcapacity,” Bloomberg reported.

China’s struggling housing market and years of declining property values have also eroded middle-class wealth and consumer confidence. Bank lending data released Wednesday showed the first contraction in outstanding loans since 2005.

Meanwhile, the U.S. trade deficit dropped in June to its lowest level in two years, with the trade gap with China narrowing to levels not seen since 2004.

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Melissa O’Rourke is a reporter at Daily Caller News Foundation.
Photo “Chinese Workers” by ILO Asia-Pacific. CC BY-NC-ND 2.0.

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