A recent CEPR study “The European Union under pressure? Exploring Chinese trade deflection,” examines whether US tariffs on Chinese goods have caused a redirection of Chinese exports toward third markets, with a particular focus on the European Union. Using highly disaggregated monthly trade data and a difference-in-differences framework, the authors compare product categories hit by US tariffs with untreated or less-exposed products across the two main phases of the US-China trade conflict: the 2018–2019 tariff wave and the renewed escalation in 2025. Their main finding is that, during the first trade war, Chinese exports targeted by US tariffs were significantly redirected toward the EU. Six months after the tariffs were introduced, exports in affected product markets were around 9% higher toward Europe, and after fifteen months the increase reached roughly 14%. In quantitative terms, the authors estimate that the EU absorbed about one third of the decline in US imports from China during that episode.
The paper is careful, however, not to overstate the result. Trade deflection is real, but it is not evenly distributed across the economy. Its effects are concentrated in specific product markets, especially where trade relationships are less “sticky,” meaning firms can switch suppliers and destinations relatively quickly and at lower cost. The evidence also suggests that the adjustment was driven mainly by volumes rather than prices, implying that the EU was receiving more Chinese goods rather than simply more expensive ones. Some sectors appeared particularly exposed, including precious metals, vegetable products, pulp and paper, fats and oils, and base metals. This means that the relevant policy concern is less about an aggregate flood of Chinese imports and more about localized competitive pressure on specific European industries.
By contrast, the evidence for 2025 is much more ambiguous. Although Chinese exports to the United States fell sharply after the new tariff measures, the authors do not find robust evidence that the most heavily exposed products were systematically redirected toward the EU. Their interpretation is that the 2025 shock differed from the earlier episode because it was accompanied by much greater policy uncertainty, abrupt announcements, and rapidly changing tariff schedules. In that context, the contraction in trade may have reflected uncertainty and disruption as much as standard price effects. As a result, the redirection mechanism is harder to identify statistically, and the evidence remains inconclusive at the aggregate level.
The policy implication is nuanced but important. The study suggests that European concerns about trade deflection are justified, especially in narrowly defined product markets where redirected Chinese exports can intensify import competition and create adjustment costs for domestic producers. At the same time, the authors do not argue for broad protectionism. Instead, they propose a targeted surveillance approach based on product-level indicators, designed to detect cases where exports to the EU are rising sharply while Chinese exports to the US are simultaneously falling. In other words, the paper supports selective monitoring and safeguard instruments rather than a generalized defensive trade response.