China’s exporters shift focus to Europe and Asia as Trump’s tariffs hit US sales

US President Donald Trump

Chinese manufacturers are urgently redirecting their exports toward Europe, Southeast Asia, and other emerging markets as President Trump’s renewed tariffs threaten access to the United States, their single largest export destination. Despite a sharp fall in US-bound shipments, trade data for May show exports to the European Union climbed 12%, and to Southeast Asia by 15%, offering some relief to exporters battling domestic economic headwinds, the Financial Times reported.

The tariff squeeze comes as China’s property crisis continues to weigh on growth and domestic consumption remains sluggish. “China’s still going to have to export all this stuff,” said Leah Fahy of Capital Economics, “so it’s going to have to go to other countries and they’re going to face a surge in Chinese imports.”

Chinese factories pivot to more stable markets

Along China’s east coast, particularly in Zhejiang province—the country’s second-largest exporter—factories are shifting their business models in real time. Companies like Shaoxing Sulong Outdoor Technology are actively courting buyers in Europe, with factory manager Xia Shukun confirming they recently hosted a potential customer from Norway. “We’re very eager — we can make anything,” Xia said.

Others are pursuing the domestic market or exploring platforms like Temu and Alibaba to reach new international customers. Nail lamp producer Shaoxing Shangyu Lihua Electronic Technology has halved its US exposure since last year, according to Chen Zebin, whose family owns the company. “That road isn’t working so we need to find a new one,” he said.

Weak US demand, global glut pressure margins

Even before Trump’s tariffs more than doubled average US duties on Chinese goods, manufacturers had been struggling with tepid US demand. Doris Xia of Kimo, a power tool maker, said few visitors stopped by their booth at a Las Vegas trade show in March, despite tariffs being lower then. The company is now focused on Russia, Southeast Asia, and Europe instead.

Meanwhile, the European Commission is already watching for signs of a new “China shock.” A recent EU report flagged sudden spikes in Chinese imports of products like guitars and industrial robots. Commission President Ursula von der Leyen warned that “subsidised overcapacity” in China is being dumped abroad, echoing concerns from the G7 summit in Canada.

Overcrowding in Europe squeezes profits

Companies already established in Europe are now facing fiercer competition from Chinese rivals that previously served the US market. “European buyers have too many factories to choose from, it’s driving prices down,” said Vera Wu, founder of beach umbrella maker Ewing Tourism Products. “This is the toughest year yet.”

To help offset the pain, Zhejiang’s local government is subsidizing trade show costs, offering language training, and boosting export credit insurance. But many fear that the race to diversify markets could worsen a global supply glut.

In Cixi, known as China’s “home of bearings,” exports to the US have dropped by 25% since 2017. Some plants closed during Trump’s first term. Now, others are trying to reinvent themselves before a second wave of tariffs reshapes trade once again.