US tariffs on China diverted nine cents per dollar to the EU
A Banco de España study finds that US tariffs on China during 2018 and 2019 redirected nine euro cents of trade to the EU for every dollar lost in US imports. The reallocation increased EU import volumes from China by 4.5 percent on average while reducing import prices by less than 2 percent.
Nine cents on the dollar
Analyzing highly disaggregated bilateral trade data across all EU member states from 2017 to 2019, researchers Irina Balteanu, Maximiliano Moreno, and Francesca Viani evaluated the first three waves of US Section 301 tariffs.
While US imports of targeted Chinese goods fell by over 40 percent, the reallocation toward Europe proved limited.
Across affected products, EU import volumes from China rose by 4.5 percent on average, peaking at a 6 percent increase three months after tariff implementation.
The tariff-induced reallocation accounted for roughly two percentage points of the total 7 percent increase in EU real imports from China observed between June 2018 and July 2019.
Pockets of concentrated pressure
Trade diversion varied significantly across sectors and market structures.
Diversion was concentrated in complex capital goods like telecommunications equipment and homogeneous intermediate inputs such as chemicals and metals, where import volumes grew 11 percent and prices dropped 13 percent.
Markets where China held a pre-tariff share above 20 percent saw import surges exceeding 10 percent.
Price cuts were concentrated in the low-price market segment, hitting emerging Asian suppliers hardest.
Modest total, acute local pain
Aggregate metrics showing mild diversion offer false comfort to European policymakers.
For specific manufacturing niches and lower-tier domestic suppliers, the localized influx creates genuine margin compression.
Blanket assessments risk overlooking severe sectoral dislocations under renewed tariff escalations.