U.S. tariffs slowed down China's manufacturing in May
The data from Caixin Media Co. and S&P Global (SPGI) said the Caixin/S&P Global manufacturing purchasing managers' index slipped to 48.3 last month from 50.4 in April.
'Overall, in May, manufacturing supply and demand declined, dragged by overseas demand,' Wang Zhe, a Caixin Media Group economist, said in the report.
It was the lowest recorded reading since September 2022. The Caixin PMI is used to measure Chinese manufacturing activity, and the 50-mark designates the border between expansion and contraction.
The decline was the result of a sharp reduction in new manufacturing orders, per the Caixin report. Chinese factory output also fell for the first time in 19 months, breaking a prolonged stretch of growth.
A positive indicator in the report was a slight improvement in business optimism, as Chinese companies expressed confidence that trade tensions between the U.S. and China will cool in the near future. They also showed optimism in their ability to secure new markets for exports.
President Donald Trump initially imposed triple-digit levies on China in April, and scaled it back a month later to 30% after a preliminary agreement to continue talks towards a bigger trade deal was secured. China maintains a 10% tariff on U.S. products.
Those negotiations appear to be stuck in neutral at the moment, and both countries have accused one another of violating the early accord. White House Press Secretary Karoline Leavitt said on Monday that it was likely that Trump and Chinese President Xi Jinping would speak this week.
Meanwhile, the Organization for Economic Cooperation and Development said in another report released Tuesday that Trump's sweeping import taxes are boomeranging to damage the U.S. economy. The group projected U.S. GDP growth to reach 1.6% in 2025, a sharp decrease from its original projection of 2.2%.
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