Potential Redirection of Chinese Exports to the UK and EU as USA tariffs goods under $800

4th August 2025

With U.S. buyers facing higher costs under the new de minimis rules, Chinese exporters have a clear incentive to seek alternative markets. The UK and EU are already significant trading partners could absorb some of the volume that used to flow to American consumers.

Historical Precedent
During the 2018 U.S.-China trade war, higher American tariffs drove Chinese exporters to redirect goods toward Europe.

Between 2018 and 2019, euro-area imports from China rose by around 2-3% as Europe picked up the slack.

That shift helped Chinese suppliers maintain production volumes even as U.S. demand weakened.

Scale of Possible Redirection
Economic research suggests a substantial reallocation if U.S. tariffs remain elevated:

Estimated Increase in EU Imports from China
Moderate tariff spike (2018-style) 2-3%
Severe tariff escalation (2025-style) Up to 10%

Under a "severe scenario," euro-area imports could climb by as much as 10% in 2026, according to elasticity-based models.

Strategic Outreach to Europe
China's government and businesses are already pivoting toward the UK and EU:

Beijing has held high-level trade dialogues with Brussels, despite some frictions over investment rules and market access.

State-backed export promotion schemes are targeting European buyers to fill gaps left by U.S. customers.

Chinese industry associations are attending EU trade fairs in greater numbers, emphasizing "Europe-first" marketing.

Implications for UK and EU Markets
Price Competition More Chinese goods could put downward pressure on prices for electronics, clothing, and homeware.

Supply‐Chain Shifts European importers may need to adapt logistics and warehousing to handle higher volumes from China.

Regulatory Scrutiny An influx of low-price goods might trigger anti-dumping investigations or discussions on tightening non-tariff barriers.

If U.S. consumer demand dials back under the new de minimis regime, China is very likely to redirect a meaningful share of its exports to the UK and EU. European markets should brace for both opportunities—through lower-cost imports—and challenges, such as increased competitive pressure on domestic producers.

Impact on Consumer Prices in the EU and UK
European Central Bank analysis finds that redirected Chinese exports could lower headline HICP inflation by around 0.15 percentage points in 2026, with smaller effects persisting into 2027. This reflects an estimated 10% rise in Chinese imports under a severe tariff-diversion scenario, putting subtle downward pressure on prices for electronics, clothing, and household goods.

UK - Cheaper Imports and Competitive Effects
As EU markets absorb more low-cost Chinese goods, a spillover into the UK is likely. Excess supply redirected from the U.S. would exert downward pressure on EU wholesale prices—and, in turn, on UK domestic prices for comparable products. Consumers may see relief at the tills, especially in sectors like small appliances, apparel, and toys.

Key Drivers and Sectors
Rise in Chinese export volumes to Europe increases competition among importers.

Electronics, textiles, homeware, and toys are most exposed to lower import costs.

Savings passed on to consumers depend on retail mark-ups and distribution costs.

Broader Implications
Lower consumer prices can temper headline inflation but may also intensify margin pressures for EU and UK manufacturers. Policymakers will watch for any surge in dump-priced goods and could respond with anti-dumping measures if domestic industries come under severe stress.