Although US President Donald Trump initially backed down in the trade conflict with the rest of the world and postponed the imposition of special tariffs, he remains adamant in his dispute with China. After the latest action in the series of tariffs, goods imported from China into the US will be subject to a tariff of 145 percent. In response, China increased tariffs on American goods from 84% to 125%.
Although China claims that it does not want a trade war, Beijing is adamant that "it will not stand idly by as the legitimate rights and interests of the Chinese people are violated". The country will fight to the end, writes the German public media ARD, citing the Chinese state news agency "Xinhua".
China is the second largest importer in the US
Until now, China was the third most important trading partner of the US after Mexico and Canada. Last year, the US and China exchanged goods and services worth around $580 billion - although with a clear Chinese surplus. The US sold goods from China worth around $438 billion, making the country the second largest importer, the German media further states.
"The largest share of Chinese exports to the US is in the field of electromechanical products and audiovisual equipment," Wang-Xin Liu from the Institute for World Economics in Kiel told ARD. This is also due to the fact that large American companies such as Tesla and Apple also manufacture or assemble in China.
It is known that most iPhones are manufactured in China, which means that they are now also subject to customs duties. Apple is determined to start shipping iPhones from India to the US. However, most of the Californian company's smartphones are still manufactured by the Taiwanese manufacturer Foxconn in China.
China is also one of the most important manufacturers in the pharmaceutical industry. The country also produces furniture, shoes and clothing, which are exported to the US. Bangladesh and Vietnam are other countries producing such goods and are also affected by Trump's increased trade tariffs, the ARD publication also states.
Will many goods be redirected to Europe?
What will happen to all these Chinese products, on which solid duties must now be paid? The German Foreign Trade Association BGA warns that some of these products could now arrive in Europe. The organization's chairman, Dirk Jandura, points out that China has a much larger trade volume with the US than the EU, and that this has to be addressed somewhere.
Jürgen Mattes of the Cologne-based Institute for German Economics also fears that the consequences for Europe of the US-China tariff dispute will be significant: "The European market could be flooded with Chinese products", he tells ARD.
"China has enormous overcapacity: last year China's global trade surplus amounted to almost $1 trillion, of which about 30% went to the US. Chinese goods worth nearly $440 billion "The US imports in 2024 are largely being redirected because of high tariffs," says Mattes.
Will goods become cheaper for European consumers?
It's not just goods from China that could flood the European market. "During the first US-China trade war, many Chinese companies moved some of their production to ASEAN (Association of Southeast Asian Nations) countries," explains Wang-Xin Liu of the Institute for the World Economy. "Some of these countries are now also facing very high tariffs, so it's likely that alternative markets will be sought for these goods as well."
For consumers, this could mean at least the following: some products where competitive pressure is very high could become cheaper. "The prices of products, parts and accessories that European companies import from China for their own production or business will also fall", believes Wang-Xin Liu.
The flip side of this coin is that this could create problems for many European manufacturers and traders, warns BGA chairman Dirk Jandura.
What measures are possible?
The European Union could take measures against this - for example with import quotas that would set a maximum level of imports. In this regard, Jürgen Mattes asks whether these quotas would not also limit other imports that do not come from China.
The European Commission has already announced that it wants to protect industrial companies from the "indirect effects of trade diversion". The German "Handelsblatt" has learned from circles in Brussels that quotas could be imposed if increased imports are registered in the coming weeks. In the same vein, Mattes points out that higher tariffs on Chinese imports could also be considered as a measure to prevent an unwanted wave of Chinese goods to the European market.
However, competitive pressure is not only increasing on the European market. "A significant share of European exports is directed to emerging markets, and there China is already taking market share away from European companies. "If Chinese exports that were originally destined for the US are now redirected, this could trigger a real price war in developing countries," says Jürgen Mattes.
Wan-Xin Liu of the Institute for the World Economy also stresses that Europe is likely to lose in a price war. "Although European companies' goods are of higher quality, the large price differences could push even more customers towards imported products," says the expert.
Author: Lili Hilcher (ARD)