China’s trade with U.S. shrinks as tariff war worsens

China’s trade with the United States shrank by double digits in August as the two sides prepare for trade talks with no sign of progress toward ending a worsening tariff war that threatens global economic growth.

Imports of U.S. goods fell 22.5% from a year earlier to $10.3 billion following Chinese tariff hikes and orders to companies to cancel orders, customs data showed Sunday. Exports to the United States, China’s biggest market, sank 16% to $44.4 billion.

Chinese exporters also face pressure from weakening global demand at a time when Beijing is telling them to find other markets to replace the U.S.

China’s global exports declined 3% to $214.8 billion, a marked reversed from July’s 12.2% gain. Imports were up 1.7% at $180 billion.

U.S. and Chinese negotiators are preparing for talks in October over Beijing’s trade surplus and complaints about its technology development tactics. Neither side has given any sign of offering concessions that might break a deadlock.

The decision to go ahead with talks despite the latest tit-for-tat tariff hikes on Sept. 1 encouraged global financial markets.

Talks are due to take place in early October, later than initially planned, but the two governments have yet to set a date. Investors were unsettled by a report officials were struggling to agree on a schedule.

The latest Chinese figures reflected the possible delayed impact of a U.S. tariff hike on July 6. Forecasters had expected that to depress July sales to the United States.