U.S.–China trade recorded one of its steepest bilateral contractions in recent history in 2025, underscoring a structural shift in global supply chains rather than a short-term disruption, according to a new report released Monday by supply chain visibility firm project44.
U.S. imports from China fell 28 per cent year-on-year, while exports to China declined an even steeper 38 per cent over the full year, reflecting the cumulative impact of tariffs and trade policy uncertainty. The pullback coincided with Southeast Asian economies capturing significant market share as companies accelerated sourcing diversification.
Indonesia emerged as the biggest beneficiary, posting 34 per cent growth in imports to the U.S., followed by Thailand with a 28 per cent increase, the report said. The gains highlight how manufacturers and retailers are reconfiguring supply chains away from China toward alternative production hubs.
Despite the overall downturn, late-year data pointed to tentative stabilisation in one direction of the trade relationship. U.S. exports to China, while down sharply for most of the year, improved in the fourth quarter. The year-on-year decline narrowed to 23 per cent in November, before turning positive in December with a 13 per cent increase—the first monthly growth in U.S. exports to China in 2025. U.S. imports from China, however, remained deeply depressed through year-end, trending 34 per cent lower in December with no clear signs of recovery.
The shipping industry has adjusted to the lower trade volumes. Total blank sailings dropped to 62 in December from a peak of 131 in April, a 53 per cent decline that signals carriers have largely recalibrated capacity to the new demand environment.
Project44 said the data points to global supply chains settling into a tariff-driven baseline rather than operating in a temporary disruption phase. However, legal and policy risks continue to loom. The U.S. Supreme Court has until June to rule on the legality of tariffs imposed under the International Emergency Economic Powers Act (IEEPA), with market speculation that a decision could come as early as this week. An adverse ruling could raise questions over potential tariff refunds and the administration’s next steps.
Uncertainty has been compounded by recent remarks from President Donald Trump on social media claiming that 25 per cent tariffs are in effect for any country trading with Iran, despite the absence of an executive order. If enacted, such measures could affect China—Iran’s largest trading partner—and potentially unsettle the China–U.S. trade de-escalation agreement reached in November.
The broader outlook for shipping remains subdued. Container import volumes at major U.S. ports are expected to stay below year-ago levels through at least May, weighed down by slower global trade growth, macroeconomic headwinds and ongoing policy uncertainty.
“There should be a brief bump in imports this month ahead of Lunar New Year factory shutdowns in Asia, but we’re otherwise headed into the post-holiday shipping lull that comes each year,” said Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation (NRF). He added that retailers are seeking “more stability and certainty, especially regarding tariffs and trade policy, in 2026.”
The NRF projects U.S. container volumes will rise to 2.11 million TEU in January, still 5.3 per cent lower than January 2025. The slowdown is expected to persist through spring, with May likely to mark the first year-on-year increase since August last year.
Meanwhile, China’s expanding trade surplus suggests it is deepening commercial ties beyond the U.S., even as bilateral trade contracts. Within Southeast Asia, Indonesia’s strong growth positions it as a clear winner from the ongoing realignment of global sourcing.
“As 2026 begins, we see a world increasingly focused on protecting domestic industries and addressing perceived trade imbalances,” said Ben Hackett, founder of Hackett Associates. “This approach has raised fundamental questions about the future of free trade and international economic cooperation.”
