President Trump’s aggressive trade crackdown on Chinese imports into the USA is producing a transparent and unintended consequence. The flood of low price Chinese goods has not disappeared. It has simply modified direction. Increasingly, Europe is absorbing the surge.
From suburban backyards in England to former military air bases in Belgium, a parallel logistics ecosystem is emerging across the continent. Chinese exporters, squeezed out of the U.S. market by higher tariffs and the closure of key customs loopholes, are rapidly redirecting shipments into Europe where trade barriers remain lower and consumer demand stays strong.
Backyard Warehouses and a Shadow Logistics Network
Within the English countryside, Xue Er, a stay at home mother who moved from Shanghai to the UK in 2021, recently built a 320 square foot storage shed behind her home. It sits near vegetable beds and a chicken coop. Inside, it’s stacked with clothing, handbags, and small furniture sourced from Chinese merchants desperate to reach European buyers.
When online orders arrive, Xue packages and ships the products locally, cutting delivery times from weeks to days. In a powerful month, she earns between £3,000 and £5,000.
Her operation is an element of what logistics experts describe as an off-the-cuff or shadow supply chain. 1000’s of comparable family run warehouses across Europe store inventory for Chinese sellers, many coordinated through social media platforms and messaging apps.
This technique has turn into a critical release valve for China’s export economy. It has helped push the country’s trade surplus past $1 trillion for the primary time, in line with customs data.
Trump’s Trade Policy Rewires Global Commerce
The shift underscores how President Trump’s trade war is reshaping global trade patterns moderately than eliminating them. While U.S. imports of Chinese goods have fallen sharply, China has compensated by expanding shipments to Europe and Southeast Asia.
Shipments to the USA dropped nearly 20 percent this 12 months, but that decline was greater than offset by gains elsewhere. Chinese exporters adapted quickly, redirecting inventory, adjusting product designs, and expanding logistics routes.
The European Union has now overtaken the USA as the most important destination for China’s low value package exports, particularly items sold through e commerce platforms like Shein and Temu.
“Europe is increasing, increasing, increasing,” said Bob Liu, a Chinese manufacturer who traveled to London to advertise plush slippers produced in Fujian province.
“The U.S. was 80% of my business,” Liu said. “Now it’s about 50%. Europe is 40%.”
He has redesigned products specifically for European tastes, including oversized slippers that might be customized to resemble luxury automobile brands.
“Europeans are more friendly to the Chinese now,” he added.
The De Minimis Shift
A key catalyst behind the redirection is the USA’ decision to shut the de minimis loophole for Chinese shipments. Since May, packages valued under $800 aren’t any longer exempt from U.S. tariffs.
In consequence, exports of low value packages to the U.S. have fallen greater than 40 percent.
Europe stays way more permissive. Within the European Union, packages under €150 are exempt from customs duties. Within the U.K., the edge is £135. That gap has created a robust incentive to reroute shipments.
Chinese e commerce exports have quadrupled to Hungary and Denmark and risen greater than 50 percent to Germany, France, and the UK.
Europe Responds but Slowly
European policymakers are increasingly alarmed. Last week, the European Union agreed to impose a €3 fee on imported small packages starting in July, with plans to totally eliminate the de minimis exemption by 2028. The U.K. plans similar measures, but not until 2029.
Retail trade groups argue the changes are overdue. The sector employs roughly 30 million people across Europe and has struggled with inflation, rising costs, and weak post pandemic growth.
In addition they cite environmental concerns and consumer safety risks tied to ultra low-cost imports.
But demand stays strong. After years of economic stagnation, European consumers are embracing low prices and fast delivery.
“You’ve got to take the great with the bad,” said Zoe Giles, a 34 12 months old mother in Kent who orders 25 to 30 items a month from Shein or Temu. “It’s low-cost and convenient. It has stuff that I can’t get elsewhere.”
A Latest Silk Road within the Air
Fueling the surge is a rapidly expanding air cargo network connecting China to Europe through Central Asia. Industry insiders have dubbed it a contemporary Silk Road.
Abdulaziz Abdurakhmanov, founding father of cargo airline My Freighter, launched his business in 2023. It now operates roughly 200 flights a month, transporting greater than 8,000 tons of e commerce packages into Europe. Temu is amongst its largest customers.
“We’re at our maximum capability, Alhamdulillah,” Abdurakhmanov said.
Airport congestion is reshaping Europe’s logistics map. Secondary airports akin to East Midlands within the U.K. and Liège in Belgium are emerging as key hubs because of fewer restrictions and available capability.
“Temu, Shein, Alibaba, they’re the most important shippers on this planet now,” said Peter Scholten, chief business officer of the aviation network One Air is an element of.
“You realize, wow, these guys are really ahead of us.”
Family Warehouses Replace Drop Shipping
Chinese platforms are also changing how goods are stored and delivered. Relatively than counting on drop shipping directly from factories, corporations increasingly pre position inventory inside Europe to hurry delivery.
JD.com, which operates Joybuy, leased roughly 530,000 square feet of warehouse space in Milton Keynes this 12 months.
Smaller sellers depend on family warehouses, which may charge as little as 70 cents per package for lightweight goods and offer flexibility that business facilities don’t.
Eva Lin, who runs a family warehouse outside Paris, packages clothing and residential goods for Chinese sellers. She works 4 to 5 hours a day and faces penalties if shipments are delayed beyond 24 hours.
As volume grows, some operators are expanding into larger facilities. Cao Ying, who runs a 1,000 square meter warehouse near Düsseldorf, says competition is intensifying.
“Why is it all the time the shoddy, messy junk?” she said. “Europe is becoming a dumping ground.”
Safety and Regulatory Concerns Grow
European consumer groups have raised alarms about product safety. A joint investigation found that 70 percent of greater than 100 items sold on Shein and Temu failed to fulfill EU safety standards.
Products included toys with choking hazards, USB chargers that overheated above boiling temperature, and jewellery containing cadmium levels 1000’s of times above legal limits.
Shein said it removed the items and tightened screening of third party vendors. Temu cited separate testing results and said it removes non compliant products.
Why This Matters for Investors
For investors, the redirection of Chinese exports carries several implications:
- European retailers face rising competitive pressure that might compress margins and speed up consolidation.
- Logistics firms, cargo airlines, and secondary airports are emerging beneficiaries of shifting trade flows.
- E commerce platforms with global logistics flexibility are proving resilient to tariff shocks.
- Policymakers may speed up regulatory responses that reshape pricing and demand.
Perhaps most significantly, the trend highlights a broader reality. Tariffs rarely eliminate trade. They redirect it.
President Trump’s strategy has forced China to adapt quickly. Europe is now grappling with the economic, political, and consumer consequences of becoming the brand new endpoint for the world’s least expensive supply chain.
Whether European regulators can stem the tide without triggering higher prices or political backlash stays an open query. For now, the packages keep coming.