- EU fears trade diversion as US tariffs push Chinese exports away from American markets and potentially into Europe.
- Chinese goods rerouted to Europe include energy products and low-cost items that could undercut local industries.
- EU-China talks ongoing to address trade imbalances and prevent escalation amid growing global trade tensions.
New US tariffs on Chinese imports are expected to sharply reduce trade between the two superpowers, but this shift could have ripple effects that impact Europe in unexpected and unwelcome ways. With Chinese goods likely to be diverted from the US market, the European Union is increasingly concerned that its own markets may become the next destination for a surge in Chinese exports, potentially intensifying already strained trade relations.
The European Union has long expressed unease over what it sees as dumping — the practice of selling goods like solar panels below market value, harming local industries. That concern was front and center in a recent conversation between European Commission President Ursula von der Leyen and Chinese Premier Li Qiang. The EU emphasized the need for China to help prevent trade diversion caused by global overcapacity and new tariffs.
The latest US tariffs, which impose a 145% duty on certain Chinese goods, took effect this month. Chinese exporters, aware of the looming restrictions, rushed shipments in March, causing a temporary spike in exports. However, this is widely seen as a short-term reaction, and a significant drop in US-bound exports is now expected. Economists warn that surplus Chinese products may soon be redirected to other markets — with Europe likely to be one of the most affected.
Signs of redirection are already emerging. Chinese companies are reportedly rerouting shipments originally intended for the US to European markets. This includes energy products, such as liquefied natural gas, which are now being offloaded in Europe. The move has prompted speculation that Europe will soon face a fresh wave of cheap imports, potentially triggering its own tariffs to protect domestic producers from being undercut.
Despite the looming challenges, the EU is attempting to avoid a direct trade confrontation with China. Recent talks have focused on creating mechanisms to track trade diversion and negotiate solutions. The EU has already imposed significant tariffs on Chinese electric vehicle imports and is engaged in ongoing discussions with Beijing. At the same time, China is seeking to maintain favorable relations with Europe, positioning the EU as a potential ally amid an escalating global trade conflict.
