Containers are seen at Yantian port in Shenzhen

China’s August Exports Shrink as Tariff War Hurts U.S. Sales

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China’s exports unexpectedly contracted in August, with sales to the U.S. tumbling amid the escalating trade war between the two nations.

Exports decreased 1% in dollar terms from a year earlier, while imports declined 5.6%, leaving a trade surplus of $34.84 billion, the customs administration said Sunday. Economists had forecast that exports would grow 2.2%, while imports would shrink by 6.4%. Shipments to the U.S.

President Donald Trump’s administration raised tariffs on Chinese goods at the start of the month, and is set to ratchet up levies further in October and again in December if there is no breakthrough. China and the U.S. will hold face-to-face trade negotiations in Washington in the coming weeks, after a rapid deterioration in relations last month left global investors reeling amid increasing evidence the conflict is harming both nations.

“It’s bad on all fronts,” said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. “Add in the inevitable fall-off when U.S. shipments finally catch up with 15% and 30% tariffs, and it’s an ugly picture.”

Weak exports add pressure on China’s already-slowing economy and point to an increased need for its policy makers to beef up stimulus measures. The central bank said Friday it will cut the amount of cash banks must hold as reserves to the lowest level since 2007, injecting liquidity

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