Over the past six years, the European Union and the United States have reviewed the foundations of their trade policies towards China. After having put in place tariff barriers on nearly 60% of Chinese products in 2018, the United States introduced the term "de-coupling", before preferring the term, favoured by the presidency of the European Commission before them, "de-risking"[1]. The European Commission, for its part, has been referring to China as a "systemic rival" since 2019[2]. It then put in place economic defence instruments which it has very recently used, in particular by imposing heavy sanctions against producers of electric vehicles exporting from China[3].
If the European Union and the United States both express the wish to reduce the weight of China in their imports, is this wish on the right track to being realised, almost 5 years after these first announcements? Furthermore, have the American and European "de-risking" policies, which take very divergent forms, revitalised transatlantic trade and contributed to "friend-shoring", that is to say to the increase in trade between "friendly" countries? Let's look at the numbers to find answers to these questions.
On the American import side, the inflection of goods from China has been clear and significant since the start of the trade war between China and the United States (see table 1).
Table 1 - Data source: USITC and Eurostat
The first customs duties applied to Chinese products, called “tariffs 301”, were introduced in 2018. These duties refer to Section 301 of the US Trade Act, which authorises the president to impose tariff sanctions on imports when the country of origin adopts trade or economic practices perceived as unfair and harmful to US commerce.
These measures, initially put in place under the Trump administration and then supported and added to by the Biden administration, now concern around 60% of Chinese products imported into the United States, with tariff sanctions ranging from 10% to 100% of the price excluding tax.
With these tariff barriers, the United States' objective is not only to protect its market, its production and its jobs, but also to quickly promote a diversification of sources of supply, particularly for American companies. This policy has paid off, as between 2018 and 2023 the share of imports from China has fallen by more than 8 percentage points, from 21% to 13% of US imports (see Table 1).
The scenario is a little different on the European side. The share of Chinese goods in European imports continued to increase until 2020. Since then, it has been slowly but surely decreasing. The share of imports from Chinese fell from 22.5% to 20.5% of total European imports in 2023. Although the European Union has put in place an arsenal of economic defensive measures, notably with new anti-subsidy procedures, largely publicised in the case of electric vehicles, it does not have systematic tariff barriers on products from China. This absence explains the much slower decline in Chinese imports into the European market.
Table 2 - Data source: USITC
On the US side, the comparative analysis of the five main exporters to the United States reveals that the decline in the share of imports from China coincides with an increase in the share of imports from the other four exporters, in particular the EU and Mexico (see Table 2). As such, the EU's share of US imports increased from 22 to 25% between 2022 and 2023, confirming a trend that began in 2020. Similarly, Mexico's share of US imports has also seen a marked increase – from 18 to 20% between 2022 and 2023 – following an upward curve similar to that of European imports. Mexico also appears to be one of the major beneficiaries of the trade war between China and the United States.
In-depth analyses of US imports have shown that the contraction in imports from China mainly concerns goods subject to customs barriers, and benefits certain third-party countries such as Vietnam, Taiwan, Canada, Mexico and India. If the EU does not appear in these studies, it is because American experts do not consider it as a single entity, but as 27 separate countries[4]. But considered as a whole, the EU is indeed the leading exporter to the United States.
Table 3 - Data source: Eurostat
On the European side, we observe a significant increase in the share of American imports between 2021 and 2023 - from 11.0% to 13.8% of the total (see table 3). This increase partly coincides with the decline in imports from China.
Table 4 - Data source: Eurostat
Between 2022 and 2023, Chinese imports in value terms decreased by an average of 20%. Three product categories are particularly affected: machinery and transport materials, manufactured goods and chemicals (including pharmaceuticals and plastics).
Although this drop is significant – reaching up to 50% for chemicals, for example – imports from China actually turn out to be very volatile. Indeed, if the fall is significant between 2022 and 2023, we note that there was a strong increase in imports from China in these product categories in 2022 compared to 2021 (see table 4). The year 2024 will be decisive in assessing whether the decline is confirmed or whether it is only a cyclical fluctuation, linked to the effects of Chinese tacit support for Russia in the context of the invasion of Ukraine and the desire expressed by the EU to diversify its sources of supply. It is worth noting that only imports of the energy products category increased in 2023, which indicates that the Russian gas and oil embargo has led to an increase in imports from China in this category. However, the quantities imported remain negligible compared to imports from the United States or other partners in the same category. This increase therefore mainly reflects the effects of the European embargo policy on energy products from Russia.
Table 5 - Data source: Eurostat
At the same time, the analysis of EU27 imports from the United States between 2022 and 2023 reveals a mixed picture. First of all, all product categories considered, the jump is highest in 2022 since imports from the United States increased by 34%. In 2023, the overall increase slowed down as the value of imports increased by only 0.6%. For 2023, the share of energy imports decreased by 16% over this period, which in effect represents a “return to normal” after a significant increase in imports from the USA in 2022 to offset the drastic reduction in imports from Russia following the invasion of Ukraine. Indeed, after the start of the war, the EU greatly increased its other sources of supply, especially from the United States. The decline observed in 2023 therefore indicates a gradual return to normality rather than a major change of course.
In contrast, a significant portion of the decline in machinery and vehicle imports from China benefited U.S. exporters over the 2021-2023 period. The increase in imports from the United States has been significant and stable since 2021 (15% between 2022 and 2023, after an increase of almost 20% between 2021 and 2022). For chemicals and manufactured products, two other categories impacted by the decrease in imports of Chinese goods into the European market, the benefit for American exports is less significant for the year 2023 (respectively 5% and 1% increase) while imports from China have fallen (by 27% and 50% in 2023). It should be noted, however, that these small increases follow significant increases of 23 and 18% respectively between 2021 and 2022. In other words, the friendshoring between the EU and the United States was decidedly real but partial during the period 2021 to 2023 for chemicals, manufactured goods and transport machinery and materials.
Between 2022 and 2023, US imports from China decreased by an average of 24% across all categories of goods, with the exception of raw materials (7%).
Table 6 - Data source: USITC
The most affected categories include those already observed on the European side: chemicals (-58%), machinery and transport equipment (-30%) and manufactured products (-20%). In the American case, food and tobacco imports also fell by 20%. As with the EU, imports from China were volatile over this period, with 2022 showing a slight increase in most of these categories. This drastic drop in 2023 can in fact be explained in part by the “de-risking” policy, but also by a reaction from the United States to China’s tacit support for Russia during the invasion of Ukraine. As with the EU, analysis of the 2024 figures will make it possible to assess whether this trend is sustainable or whether it is primarily linked to the geopolitical situation of 2022 and 2023.
Table 7 - Data source : USITC
By contrast, US imports from the EU increased by 4% in 2022-2023 across all categories. This increase, gradual and constant since 2020 (see table 2), tends to concentrate on specific categories in 2022-2023, notably chemical products (3%), machinery and transport equipment (12%) and “other articles” (10%), the latter category mainly includes products that are difficult to classify, such as gold coins. Part of the decline in imports from China of machinery and transport equipment was absorbed by the EU: while imports from the EU increased by 12%, imports from China fell by 30%. Similarly, a marginal portion of chemical imports previously sourced in China are now supplied by the EU (+3%).
It is important to note that the categories of products most imported from the EU by the United States coincide with those that the EU also imports from the United States. The reason is simple: the EU and the US are trade competitors. In terms of exports, the two players are positioned in similar categories. Over time, thanks to its rapid development, China has gradually begun to compete with the EU and the United States in the categories where they have historically performed best. With the desire to diversify their sources of supply, the United States and the EU are once again becoming privileged partners for each other in these areas.
However, while the US and the EU are (re)turning to each other for goods where each is competitive, they are also looking to source from countries neighbouring China, or those similar in terms of economic development. In short, even if friendshoring only works partially, it is not only based on the geopolitical proximity and compatibility of values between the EU and the US, but also on the fact that in the absence of China in the trade landscape, the EU and the US become “attractive” suppliers for each other again.
In recent years, the de-risking trend of Western economies concerning China has indeed taken place, but it is more marked on the American side than on the EU side. While imports from China have decreased for both players, American de-risking is significantly faster than European de-risking. For this reason, the trend of friendshoring on the American side is slow, gradual and stable. As for the EU, this trend is more erratic and very variable from one year to the next, even if the overall trend is clearly present. Despite a similar value system and a strong military alliance, both players remain pragmatic – friendshoring only concerns the categories of goods where they are competitive. Part of the drop in Chinese exports to both sides of the Atlantic has therefore been redistributed to the allied partner.
[1] White House, “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institutions”, 27/04/2023. De-coupling refers to the desire to remove the links between two economies, i.e. to unlink production chains, while de-risking refers to a process of eliminating or mitigating risks.
[2] European Commission, “Commission reviews relations with China, proposes 10 actions”, Press release, 12/05/2019.
[3] Michael Race, “EU Hits China with Big Taxes in Electric Cars Battle”, BBC, 04/10/2024.
[4] Caroline Freund Et Al (2023), “US-China Decoupling: Rhethoric and Reality”, VoxEU, CEPR.