China is in the EU’s sights after its imports to the US were hit on Wednesday by 54% cumulative US tariffs
As reciprocal tariffs kick in, the EU is expecting goods formerly destined for the US to seek EU markets, with Chinese renewables, steel and electronics topping a list of products the Commission is keeping its eye on.
The side effect of tariffs is overcapacity, and European Commission officials describe the journey that products subject to tariffs are likely to make from previously attractive US markets towards European shores as “dynamic”.
“There might be trade diversion, with some countries which can no longer export their goods to the US choosing alternative markets,” an EU senior official said.
“Of course we [the EU] will be ready to defend our market, we are not going to absorb whatever volume and quantity,” this official added.
China is in the EU’s sights after its imports to the US were hit on Wednesday by 54% cumulative US tariffs. Its steel is likely to be one of the overcapacity products to spill onto the EU market, especially in view of the faltering domestic Chinese construction sector. “Steel has not been able to be consumed domestically in China,” the same senior official said, pointing the risk of diversion towards the EU.
Chinese and EU steel was already hit by 25% tariffs which came into force mid-March. OECD data of 1 April found global steel excess capacity is expected to grow from an estimated 602 million tonnes in 2024 to 721 million tonnes by 2027. It represents over five times the bloc’s steel production, according to Eurofer, the European association representing the steel industry.
Other Chinese products are also expected to seek new routes to market the EU. “Electronic devices and renewables, such as solar panels or wind turbines also represent a risk for the EU,” Alicia García Herrero, expert from the Bruegel think tank, told Euronews. Electric Vehicles, which are already subject to EU tariffs since November 2024, are also on the list of products that could be subject to overcapacities, she added.
The Commission plans to step up its surveillance of global markets when reciprocal US tariffs come into force for China and other countries across the globe on 5 and 9 April.
“For China, we have been there before in the steel sector, in particular when the US in 2017 closed its market to Chinese imports. At the time we adopted safeguard measures,” said the EU official.
Safeguard measures, authorised under WTO rules, make it possible to reduce imports of certain products in the event of a sudden influx of a product on a given market.
“We have that for steel for a while. It’s too early to say whether we’ll need it for other sectors. We are looking closely,” the official added.
China, faced with a fresh 34% tariff on top of the 20% Trump previously imposed, vowed countermeasures, seemingly taking little heed of a warning by US Treasury Chief Scott Bessent that such moves would lead to escalation.
US tariffs on goods from Vietnam among the highest on any country. Vietnam’s Prime Minister Pham Minh Chinh said that the country still hoped to reach its economic growth target despite the Trump administration imposing 46 per cent tariffs on its exports.
Close allies like Japan and the European Union were not spared, facing 24% and 20% tariff rates respectively. The base 10% tariffs go into effect on April 5 and the higher reciprocal rates on April 9. EU chief Ursula von der Leyen described the tariffs as a major blow to the world economy and said the 27-member bloc was prepared to respond with countermeasures if talks with Washington failed.
Britain said it would consult businesses on the implications of any retaliatory action it could take in response to Trump’s 10% tariffs on British imports, its business secretary said. “For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” Trump said. Economists have warned that tariffs could slow the global economy, raise the risk of recession.
Italian PM Giorgia Meloni said the tariffs announced by the US were a mistake but their impact should not be overestimated and the reaction needed to be carefully considered. “We must not fuel alarmism, it’s not a catastrophe,” Meloni said.
Canada and Mexico, the two largest US trading partners, already face 25% tariffs on many goods and will not face additional levies. PM Carney said Canada would match Trump’s 25 per cent auto tariffs with a tariff on vehicles imported from the US.
