Chinese Exports to UK Surge 66% as US Tariffs Drive Trade Shift

Chinese exports to the UK have reached their highest level in over two years, driven by increased tariffs on Chinese goods in the US. This shift is particularly noticeable in the categories of small parcels and electronics, where Chinese firms have redirected their shipments to European markets, including the UK, due to eased trade restrictions and consistent demand.

In May 2025, China's small parcel exports to the UK surged by 66% compared to the previous year, with the total value of these parcels reaching nearly $2 billion in the first five months of 2025. This adaptability of Chinese exporters to global policy changes has allowed them to maintain the flow of goods despite the tariff hikes. Additionally, Chinese smartphone shipments to the UK increased by 26% between January and May 2025, while computer shipments rose by 11% during the same period. In contrast, smartphone imports from China to the US fell by 18% and computer imports dropped by 25%.

This trend suggests that Chinese exporters are fulfilling their promise to seek alternative markets in response to US tariff increases. The UK's Office for National Statistics reported that the country imported goods worth £6 billion ($8.2 billion) from China in April 2025, marking the highest monthly total in over two years. Trade data from Beijing also indicates that exports to the UK are exceeding normal seasonal levels.

While the increased supply of low-cost Chinese imports could potentially bring down prices faster than expected, UK policymakers are closely monitoring the situation. The Bank of England is watching to see if the influx of affordable goods, such as clothing, electronics, and home essentials, could help reduce inflation, which is currently above 3%. However, there are concerns about the impact on local industries and job security, as manufacturers may struggle to compete with cheap imports.

Business Secretary Jonathan Reynolds has expressed that the government is closely monitoring signs of "trade diversion," where goods originally intended for another country are redirected to the UK in large volumes. This practice, if sustained, could lead to "dumping," where products are sold at very low prices, sometimes below production costs. Reynolds has stated that his department is prepared to use trade remedies or safeguards to protect vulnerable sectors such as steel, textiles, or consumer electronics.

External policymaker Catherine Mann argues that the public may not see much benefit in lower prices, even with the increased volume of cheap imports. This is because many retailers might use the savings from low-cost imports to restore their profit margins, which have been squeezed by rising wages, rent, and energy bills over the past two years.

Associate Professor at the London School of Economics, Thomas Sampson, cautioned against making big predictions based on short-term data, despite acknowledging the early signs of trade diversion from the US to the UK. He said it will take several more months of consistent trends before policymakers can conclude that Chinese exporters have made the UK a long-term substitute for the US market.

UK officials are aware that the long-term impact will depend on how global trade flows evolve in the coming months. They remain vigilant and ready to act if needed, ensuring that the benefits of increased trade with China are balanced with the protection of local industries.