Cheap Chinese imports pose a threat to European businesses, but EU anti-dumping measures could do more harm than good, writes Enrico Vanino.
President Trump’s spiralling trade war with China increasing tariffs on a wide range of Chinese goods – including everything from electric vehicles to consumer products and industrial inputs of production – might soon trigger unintended consequences across the Atlantic, as Europe could become the unintended destination for excess Chinese cheap exports shut out of the US market.
European Commission President Ursula von der Leyen recently expressed apprehension that the redirection of Chinese trade flows could severely impact key EU industries. These concerns are echoed by representatives of major business organisations, such as the British Retail Consortium, which have warned that consumer goods and electronics could be diverted to Europe through online marketplaces and platforms at prices far below domestic production costs, a familiar concept among trade experts labelled as dumping.
Chinese dumping
Dumping refers to the export of goods at prices lower than their normal value, often below the cost of production. Such pricing practices can distort markets and severely disadvantage domestic firms in importing countries. In the case of China, these outcomes are made possible not only by economies of scale but also by state-supported production systems. Chinese firms often benefit from subsidised inputs – especially energy and raw materials – as well as financial incentives and strategic industrial policies aimed at boosting export performance.
What makes the current context particularly concerning for Europe is the breadth of sectors potentially affected. It is not just low-cost consumer goods that are at risk. A range of intermediate inputs, such as steel and chemicals – materials that sit at the heart of many European industrial supply chains – are likely to see increased competition. Even strategic green technologies like solar panels and electric vehicle components, essential for the net-zero transition, are being exported in growing volumes at globally competitive, and often suspiciously low, prices.
Should we worry about dumping?
At first glance, this influx of cheaper products may seem like a positive development for European consumers, who have endured a prolonged cost-of-living crisis. After years of inflation and high energy bills, access to lower-priced electronics, vehicles and household items could offer much-needed relief. However, this short-term consumer gain risks coming at the expense of long-term industrial sustainability.
Many European manufacturing sectors are already under significant pressure. Germany’s automotive industry is already trailing behind global competitors in the transitions to electric vehicles. Italy’s machinery sector, long a pillar of its export economy, faces rising energy and labour costs and global competition. Many strategic industries are at risk, including for instance the UK steel industry that has required recent government intervention to remain afloat.
An unchecked influx of underpriced imports could deepen these vulnerabilities. As the US slams the tariff door shut on Chinese goods, Europe now stands at the edge of the floodgate – the question is whether it can channel the oncoming surge or be swept away by it.
Why anti-dumping measures can do more harm than good
There are increasing calls for stronger trade defence across the continent, particularly through anti-dumping measures. The EU has a well-established mechanism for imposing anti-dumping duties in line with the WTO rules – applying temporary tariffs levied on imports found to be sold at unfairly low prices. These are designed to shield domestic producers from unfair competition, raising prices to market levels, and giving them the opportunity to compete on a level playing field.
However, while appealing in theory, anti-dumping measures have a mixed record in practice. A substantial body of academic research casts doubt on their effectiveness. Studies show that these policies tend to benefit the least productive domestic firms – those with the most to lose from competition – while hurting the more efficient firms that rely on imported inputs and that operate across borders. Moreover, the overall impact on employment and export competitiveness is often negative.
Even more worryingly, anti-dumping tariffs can actually incentivise Chinese exporters to become more efficient. Chinese firms that survive EU-imposed duties often increase their productivity, further widening the competitiveness gap with their European counterparts. Rather than levelling the playing field, these measures may simply delay the inevitable – and in doing so, risk weakening Europe’s competitive position in the long term.
Boosting competitiveness
In this light, the EU’s current diplomatic stance towards China may be a more forward-looking approach. Instead of escalating trade tensions, the European Commission has opted to pursue engagement. Efforts are underway to encourage Beijing to reduce subsidies and consider voluntary export restraints to prevent market saturation. This cooperative strategy reflects broader recognition that Europe needs Chinese cooperation on a range of global issues, from climate action to maintaining economic stability in global markets.
From a broader industrial policy perspective, the question is not how to insulate Europe from competition, but how to empower it to compete. The challenge facing European industries is not just the cost of Chinese imports but the structural weaknesses within its own production base. Tackling these challenges requires a shift from protectionism to productivity enhancement.
This means investing in the future: boosting renewable energy capacity to reduce industrial energy costs, streamlining regulatory frameworks to encourage entrepreneurship, and promoting private investment in research, automation and workforce development. Europe’s comparative advantage should not be in competing on price – a race to the bottom that it is unlikely to win – but in quality, innovation and sustainability.
In strategic sectors, such as those critical to the green transition, the focus should be on supporting thriving firms that can lead on high-value, productivity and wages. Rather than protecting the least competitive firms, industrial strategy should support those with the potential to scale up, innovate and compete globally.
While the risk of trade diversion from US-China tensions is real, the aim of European countries should be to achieve strategic autonomy through increased competitiveness, not protectionist isolation.
Note: This article gives the views of the author, not the position of EUROPP – European Politics and Policy or the London School of Economics. Featured image credit: ABCDstock / Shutterstock.com