China's economy is outpacing the US despite Trump's tariffs. Here's what Goldman Sachs says it could mean for trade

The Asian nation’s gross domestic product grew 4.5% in the July-September quarter, just 0.1% above economists’ forecasts, according to Goldman Sachs economist Hui Shan.

“Contrary to our expectation of moderate fiscal loosening at the beginning of the year, fiscal data have shown effective tightening,” she said. “In the first nine months of this year, combined revenues from the general public budget and government managed funds increased by 1.4% [year over year], whereas expenditures fell by 3.5%.”

China appears to be reducing its deficit as a share of its GDP. The CBO’s long-term budget projections show total deficits averaging 7.2% of GDP over the next three decades (2026-2056).

A damaged relationship, but not an absent one

While the trade link between the countries has weakened, it hasn’t vanished, JPMorgan had pointed out in May. China is still dependent on trade. But it’s less dependent on the U.S. than it used to be. U.S. imports from China hit lows last year than during the pandemic and are expected to drop even further this year.

Tariff rates between the U.S. and China have simmered from their heat earlier on in the trade wars; levies between the two nations are still high compared to years past.

On the other side, China’s tariffs on U.S. exports have hovered at 31.9% as of August 2026, according to the Peterson Institute for International Economics.

Is there hope?

According to Fortune, recent data released by the Chinese government revealed that their exports leaped by 36.3% in September compared to the previous year. That’s their fastest growth since February.

Leverage is something the U.S. and China are both fighting for, with tariffs the most visible of the pressure points. The Americans, though, can also utilize semiconductor exports and investment restrictions to help their cause. Rare-earth supplies are just as important, though, and the advantage there goes to China, which accounts for roughly 70% of rare-earth mining, 90% of separation and processing and 93% of magnet manufacturing