Insight Investment

Some countries appear to be redirecting trade toward the eurozone

Following the implementation of US tariffs, there was a concern that China and other major exporters to the US would redirect goods originally destined for the US into other markets at heavily discounted prices, with the eurozone one of the most impacted by this given its scale within the global economy.

If we look at average monthly imports to the eurozone we can see some evidence of this, with average monthly imports from Canada, Mexico, China and Switzerland meaningfully increasing in 2025 as these countries redirected trade away from the United States (see Figure 1). Imports from the US have also risen, but this is largely related to energy as the eurozone pivots away from Russia.

Figure 1: Average monthly eurozone imports, 2025 relative to 2024¹

However, when we look at the scale of imports – represented by the size of the bubbles in Figure 2 – it becomes clear that although Mexico and Canada have grown, they still account for only a negligible share of total imports, with Switzerland larger but still small in the overall picture. China in far more substantial in absolute terms, but imports were notably lower in the second half of the year compared with the first.

Figure 2: Eurozone nominal imports by country¹

China is still exporting disinflation, but no sign it’s speeding up

An examination of price trends relative to volumes shows that China continues to export disinflation, both to the eurozone and the broader global economy. However, this reflects an ongoing trend rather than any marked acceleration in pricing pressure caused by goods dumping, with the pace of disinflation broadly consistent over recent years.

Figure 3: Chinese exports to the eurozone¹

Figure 4: Chinese global exports¹

Conclusion

At this stage, the secondary effects of US tariffs on the eurozone appear limited. China continues to export structural disinflation rather than diverting excess goods into the region. Countries such as Canada are seeking closer ties with the EU – formalising a strategic partnership in 2025 – but their export volumes remain too small to materially influence the eurozone’s overall import mix.