China "unloads" in Europe - WTO predicts increase in Chinese exports to the EU this year
Weeks after the first wave of tariff announcements from Washington, international trade data is showing a weak outlook. Leading signs signal a serious risk of goods diversion to Europe, as tensions between the US and China escalate, the World Trade Organization (WTO) says.
The WTO's "Global Trade Outlook" found that the decoupling of the Chinese and US economies would lead to an 81% decline in goods trade between the two countries by 2025, and 91% without the recent exemptions granted by the US administration for products such as smartphones.
As a result, the report predicts a 6% increase in Chinese exports to Europe. But Europe, also hit by US tariffs, will also look for other markets for its exports.
The United States has imposed tariffs of 25% on EU cars, steel and aluminum. The 10% American tax also applies to other exports from the bloc.
Tensions between Beijing and Washington have escalated recently, with Chinese exports to the US being hit with 145% tariffs and American goods in China facing 125% duties.
Overall, Chinese goods exports are forecast to grow by 4% to 9% in all regions outside North America, according to the report.
The WTO announced a 0.2% decline in the volume of world merchandise trade in 2025, which amounts to almost three percentage points lower than expected.
“One of the clearest lessons of the COVID-19 crisis is the importance of diversifying sources of supply. Today's trade tensions remind us that we must also diversify demand. Overconcentration leads to overdependence, making economies more vulnerable to shocks and fostering a sense of unfair burden sharing, ” the Organization underlines.
The report said the disconnect between the US and Chinese economies will contribute to a broad fragmentation of the global economy along geopolitical lines into two isolated blocs.
It will also have an impact on global GDP. “Our estimate is that global GDP will decline by almost 7% in the long run,” the report says.
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