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Bota Posted on 2025-05-15 11:48:00

US-China trade clash threatens EU - European market at risk from rising Chinese exports

From Kristi Ceta

US-China trade clash threatens EU - European market at risk from rising Chinese

China's growing trade surplus with the European Union is fueling new concerns among the bloc's countries, as Europe risks becoming a dumping ground for cheap goods, due to the tariff war between Washington and Beijing.

As European officials increase vigilance to avoid an influx of Chinese goods facing higher barriers to entry into the US, data now shows that China's surplus with the EU reached a record $90 billion in the first four months of this year.

For now, most of the rerouting of Chinese goods is going to Latin America and Southeast Asia. But the amount of Chinese exports already flowing into Europe since the pandemic has raised concerns that the flow could accelerate as higher US import tariffs continue.

Even though China and the US lowered their tariffs this week, Washington's duties on most Chinese goods are still 30 percentage points higher than they were in January. These global trade changes are testing Europe's strategy of treading carefully in the fast-paced race to create new rules that run counter to a central tenet of the EU's existence: economic openness.

While China responded to President Donald Trump's aggressive policies with retaliatory tariffs, the bloc instead prepared targeted measures to implement only if talks with Washington fail.

Chinese exports to the EU so far this year are the second highest ever recorded, according to data released in Beijing, surpassed only by the 2022 surge in goods caused by the pandemic. Maros Sefcovic, the EU's trade chief, said last week that "we are monitoring potential risks of trade diversion" and initial results are expected in mid-May.

Meanwhile, Chinese purchases have been falling steadily as domestic demand slows. Domestic companies are becoming more competitive, pushing European suppliers out of the market. The EU has long been concerned about the rapid growth of imports from China, especially as prices for these products have been falling due to deflation in the country.

Even before Trump returned to the White House in January, the trade relationship between Europe and China was undergoing a transformation. This can be seen in the rapid change in German-Chinese trade ties, which moved from a deficit for China of more than $18 billion in 2020 to a surplus of $12 billion last year.

If the trend of the first four months continues for the rest of this year, this surplus with Germany could exceed $25 billion. The car market has been one of the main drivers of the change, with Chinese exports of electric vehicles and conventional cars growing rapidly, while European shipments and sales to China are falling rapidly.

Although electric vehicle exports have stalled since Brussels imposed tariffs on them last year, Chinese manufacturers are selling more cars than ever in the region, increasing shipments of hybrid and internal combustion engine models. The situation will push European policymakers to pursue more active measures to support domestic industry and impose tariff and non-tariff barriers.

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