ZEITGEIST SERIES

BRIEFING #63

Is A Wave of Chinese Products Coming Your Way? Identifying

Potential Chinese Export Redirection in 2024 U.S. Trade Data
Simon J. Evenett, 22 April 2025
Tariff escalation between China and the United States will result in decoupling of goods trade. In turn this has
raised fears that the $429bn of Chinese exports destined to the U.S. market in 2024 will be redirected or
deflected to third markets. Fearful of intensified competition from Chinese products, some business
associations and officials are calling for pre-emptive measures by importing governments. In this briefing I use
the most disaggregated U.S. import data available to demonstrate that there are only 101 Chinese product
categories where these were sufficient exports in 2024 to realistically raise export redirection risks. Moreover,
I show that the majority of those Chinese products were losing ground in the U.S. market, calling into question
whether, in fact, the exporters responsible will become fearsome competitors in world markets, as some assert.
Now that exports from China face astronomical deflected in large quantities from the U.S. market
import tax (tariff) rates in the United States doesn’t mean the Chinese firms responsible have
market, concerns have been raised that these been gaining in competitive strength.
goods will be redirected—or deflected to use the
This briefing complements the last one issued,
trade policy term—to third markets.
that was prepared by Fernando Martin and myself.
Some worry this will intensify competition for Rather than the prospective analysis presented
customers, result in price cutting and profit here, that briefing looked back at the onset of the
margin reduction wherever this “wave” of Chinese first U.S.-China Trade War to assess the extent of
exports ends up. Over the past fortnight stories Chinese trade deflection and the frequency with
amplifying these concerns were published in the which importing governments took defensive
New York Times and the Financial Times. measures in response. We found that, within 18
months of the onset, trade deflection was
Certain business associations have already
detected in 42% of possible cases.
started lobbying governments to raise import
barriers—arguing that it is better to take pre- Moreover, we found that importing governments—
emptive action than to deal the fallout from taken here to be the rest of the G20 and
Chinese dumping. Such proposals risk setting off Switzerland—took defensive measures in only half
a domino effect of import restrictions on Chinese of the instances of trade deflection. For sure, there
exports, likely triggering Chinese retaliation. was significant variation across importers in their
exposure to Chinese trade deflection and in their
If corporate executives and government officials
resort to defensive measures.
misjudge the extent and consequences of
Chinese export redirection, then what started off From this, we concluded that, yes, there is
as a bout of American trade unilateralism followed precedent for Chinese trade deflection, but not on
by Chinese retaliation, could degenerate into the scale that some contend (now or then).
system-wide increases in trade restrictions. The Furthermore, it seems many importing
likelihood of a repeat of the 1930s resort to governments allowed their consumers and
protectionism would rise. There is much at stake. companies to benefit from greater supplies of
Chinese products at lower prices. These
The purpose of this briefing is to gauge the
governments’ behaviour calls into question the
competitive threat in third markets from Chinese
assumption that all Chinese trade deflection must
trade deflection in the months and years ahead. In
be bad and therefore merits defensive measures.
a first step I identify the products where a key
precondition for Chinese trade deflection is met. Now that China faces even higher import tariffs
than in 2018 and 2019, it makes sense to use the
The second step is to marshal evidence on
latest available U.S. import data to assess the
whether Chinese exporters of these products have
competitive threat posed by Chinese products
been gaining ground in the U.S. market to assess
that may in the near term be redirected from the
whether they are likely to be formidable rivals in
United States market to third markets.
third markets. Just because a product can be

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China’s exports to the USA are concentrated product categories were in retreat in the U.S.
market, then they are less likely to be fearsome
The most granular classification of U.S. imports
rivals in third markets. The opposite could be true.
groups them into 18,701 product categories.1 It is
The approach taken here is to let the data reveal
a testament to how concentrated China’s exports
the degree of absolute competitive strength of
to the United States are that more than $500
Chinese exporters in these product categories.
million was shipped in only 101 product
categories in 2024.2 Those 101 product I checked if the average price paid per unit to the
categories accounted for $213 billion of the $429 exporter in China (excluding transport costs and
billion imported into the U.S. from China in 2024. tariffs) fell—indicating reduced sourcing costs and
An Excel file is available that identifies all of these greater potential to lower prices in the U.S. market.
101 product categories. I was also interested in whether the volume of a
product exported to the United States rose. This
Why focus on these 101 product categories?
information was available for 98 of the 101
Surely, any “wave” of Chinese exports redirected to
product categories. The two measures computed
third markets requires large amounts to be
are plotted in Figure 1. Each product falls into one
exported to the United States in the first place.
of four quadrants.
Sixty of the 101 product categories are found in
five “chapters” of the U.S. Harmonized Tariff The upshot is that there is a huge variation across
Schedule. the 98 product categories in their recent
(absolute) performance in the U.S. market. Thirty-
Twenty-three were in Chapter 85 (lithium batteries
seven product categories saw the quantity
and smartphones being the biggest ticket items),
shipped to the USA (import volumes) rise from
10 were in Chapter 84 (computers and computer
2022 to 2024 as well as sourcing costs fall. These
parts), and nine each were in Chapter 39 (plastics),
37 product categories were associated with $38
Chapter 87 (motor vehicles and parts) and
billion of imports into the USA in 2024 and I label
Chapter 95 (toys and video games). The upshot:
this quadrant of Figure 1 “super-competitive.”
many goods sectors are not at risk of deflection.
Readers can check if local firms of interest
Next, I deploy more U.S. import data to assess compete against Chinese rivals in these 37
whether Chinese exporters of these 101 products product categories.4
are gaining in strength in the American market. My
By far the largest value of imports was associated
assessment is based on absolute and relative
with products in the China Defensive quadrant.
performance measures—it is, therefore, data-
Here Chinese exporters have shipped lower
driven rather than speculative.
volumes even though their sourcing costs have
fallen. A total of 31 product categories accounting
for $108 billion of imports were in this quadrant.
Absolute performance assessment
Thirty other product categories are found in the
For each of these 101 goods exported from China,
two quadrants where Chinese sourcing costs
I examined their absolute performance in the U.S.
have risen. The latter may reflect diminished cost
market from 2022 to 2024. 3 I will be transparent
control or upgrading of these Chinese products. In
about my priors: If Chinese exporters in these
either case, the likelihood is that there is a floor on

1 Formally, this is the 10 digit level of disaggregation of Chinese exports to the United States exceeding $500
the U.S. Harmonized Tariff Schedule. Import data is million.
available at the Dataweb of the United States 3 At first I wanted to examine these changes over a

International Trade Commission at longer timeframe but the U.S. HTS was updated in 2022
https://dataweb.usitc.gov/trade/search/Import/HTS. and the product categories reported were changed in
Here I used data on “Imports for Consumption” rather meaningful ways. For example, before 2022
than “Imports: General,” thereby ignoring shipments to smartphones were not reported as a separate category
bonded warehouses and foreign trade zones. In 2024 in the HTS. That’s important as smartphones
the difference between two measures is less than 2.4% constitutes the largest total value of imports in 2024
(or some $9 billion). (some $40 billion) among the 101 product categories
2 For context, in 2017, before the first U.S.-China started, considered here.
a total of 124 product categories each involved annual 4 Sort the accompanying Excel file by column O to find

out.

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the prices of these products should they be of Chinese exports are in the China Storming
deflected to third markets—undercutting price quadrant, the smallest total of the four
wars concerns. quadrants—a finding that cautions against
exaggerating the system-wide threat represented
On the basis of this evidence, generalising the
by ultra-competitive Chinese firms deflecting
competitive threat posed by Chinese exporters of
products originally destined to the U.S. market.
deflected products is unwarranted. Granular,
case-by-case assessments are warranted. A striking finding in Figure 2 is that the Chinese
import share is falling in 56 product categories
(the China Retreat8 and China Selective9
Relative performance assessment quadrants). These products account for a majority
of the plausible candidates for Chinese trade
For many, corporate performance is best thought
deflection and comprise three-quarters of the
in relative terms—I have a lot of sympathy with
imports into the United States of those products
that view. Consequently, I separated Chinese and
where more than $500 million of each were
non-Chinese suppliers of each product category
shipped by China in 2024.
and calculated the change in the Chinese import
share in the United States between 2022 and This is not to imply that firms having Chinese
2024.5 rivals in these 56 product categories have “nothing
to worry about.” Rather, it is that their rival’s
I also calculated the difference between the
diminished competitive position in the U.S. market
proportional change from 2022 to 2024 in average
calls into question whether these firms would
sourcing price paid by non-Chinese suppliers and
constitute a first-order threat in third markets.
those of Chinese exporters. To fix ideas: My priors
Moreover, it raises the question what steps other
are that increasing Chinese import shares while
firms took to put these Chinese exporters on the
coping with average sourcing costs that rise
back foot in the American market.
faster6 in China is associated with more fearsome
Chinese exporters—these cases are the ones
where competitors in third markets might want to
Combining assessments
worry about.
I now turn to the question of whether the Chinese
Data are available to make these calculations for
products that did well on the absolute
94 of the 101 product categories. The resulting
performance criteria also excelled on the relative
metrics are plotted in Figure 2. Again, so diverse
performance criteria. Surely it is these Chinese
are the findings across the 101 products that I
particular exporters that are likely to become
separate them into four quadrants.
fearsome competitors on third markets?
Only 15 product categories involve higher Chinese
For the 94 product categories that could be
import shares despite Chinese sourcing costs
classified into a quadrant in both the absolute and
rising faster than rivals, the so-called China
relative performance assessments, I then
Storming quadrant in the lower right-hand side of
produced the summary table below with 16 cells.
Figure 2. Arguably, firms competing with Chinese
In only 2 product categories—amounting to just
rivals in this quadrant may have something to
over a billion dollars of U.S. imports in 2024—were
worry about if the same competitive strengths the
Chinese exporters able to increase volume,
Chinese firms have in the United States market
increase import share, reduce their sourcing costs
carries over to the third markets.7 Some $19 billion

5 To remove the effect of prices, I calculated the change 7 Sort the accompanying Excel file by column Q to
in import share in volume terms. In the case of identify the cases of products with China Storming
smartphones, this amounts to asking what share of the (ahead).
total number of smartphones imported into the USA 8 Called such as Chinese exporters are losing market

came from China in 2022 and in 2024. share despite a growing sourcing cost advantage.
6 If your prior is that the case where Chinese average 9 Called such as Chinese exporters may be shedding

sourcing costs are rising slower (or falling faster) than lower willingness to pay U.S. buyers as their Chinese
non-Chinese rivals is the bigger competitive threat, then sourcing costs rise faster than non-Chinese rivals.
the results in the “China Undercuts” quadrant in Figure
2 will be of greater interest.

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in absolute terms while their non-Chinese rivals Two broad findings arose from this analysis. The
were cutting their sourcing cost by proportionally first is that Chinese exports to the United States
more. These two product categories were are highly concentrated in about 100 product
footwear and plastic table coverings. These are categories which accounted for around half of
not the product categories one typically hears total Chinese exports to the United States in 2024.
business people and policymakers worry about For trade deflection to occur there has to be
when they discuss Chinese manufacturing significant amounts of Chinese exports in the first
prowess. place—so looking at the product categories where
more than $500 million was shipped from China in
The middle columns and rows of this summary
2024 is a sensible starting point. Sixty of those
table reinforce a point made earlier—that the
product categories are associated with a limited
majority of products where China shipped more
number of business sectors.11
than $500 million in 2024 were ones where the
volume of goods shipped and Chinese import The second finding is that most of the products
shares were falling. Such poor performance where there were sufficient Chinese exports to the
undercuts assertions that, having lost access to United States in 2024 to make trade deflection a
the U.S. market on account of higher tariffs, the distinct possibility were also ones where Chinese
Chinese exporters in question will be formidable firms have been on the back foot in American
competitors in third markets. markets. Now, there may well be some superstar
Chinese firms shipping these goods in these
lacklustre categories but, broadly-speaking, most
Concluding remarks of the candidates for trade deflection are products
where Chinese export volumes and Chinese
The tariffs imposed this month by the United
shares of total U.S. imports have been falling since
States on Chinese imports have reached
2022. If unassisted by Chinese government export
unprecedented levels and will accelerate the
support, then one must question how much of a
decoupling of goods trade between these two
threat these Chinese exporters will become to
economies. In the future, a settlement between
rivals in third markets.
Beijing and Washington, D.C., may result in lower
import tariffs but there is no expectation that In principle, two factors could revise the sanguine
American import tariffs on Chinese products will assessment presented here. First, that the United
return to levels seen during the Biden States restores the now-paused high import tariffs
Administration.10 As a result, China’s exporters on other exporters. Taking this step would
may seek out new markets in the months and increase the range and value of goods ripe for
years ahead, leading to fears that trade deflection export redirection. Second, that Beijing—or for that
will undermine the commercial performance of matter any government hit by significant U.S.
rival firms operating in third markets. import tariff increases—offers significant
incentives to affected exporters. Those incentives
A central lesson from this briefing is that publicly
may overcome, in whole or in part, the competitive
and freely available high-quality data exists to
disadvantages that held back their ability to
enable analysts, executives, and officials to (a)
penetrate the United States market. Tracking
identify at a highly granular level in which products
state-provided export support will be at a premium
Chinese trade deflection is likely to happen and (b)
going forward.
to assess whether the exporters responsible have
been gaining a greater foothold in the U.S. market, Simon J. Evenett is Founder of the St. Gallen
likely reflecting underlying competitive strengths. Endowment for Prosperity Through Trade,
Fear should be set aside—discussions on the form Professor of Geopolitics & Strategy at IMD
and scale of future trade deflection can and Business School, and Co-Chair of the World
should be informed by evidence. Economic Forum’s Trade & Investment Council.

10 The first U.S.-China trade war was followed by a remaining quarter. In short, the Phase One Agreement
Phase One Agreement in January 2020 that saw U.S. did not restore the status quo ante tariff treatment of
tariff hikes cut in half on a quarter of affected Chinese imports from China.
imports. No tariff cuts were made on half of Chinese 11 Recall these Chapters are identified at the top of page

imports. But a tariff increase was abandoned for the two.

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 ZEITGEIST SERIES
BRIEFING #63

Figure 1: Absolute performance assessment of big-ticket Chinese export categories.

Figure 2: Relative performance assessment of big-ticket Chinese export categories.

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Summary Table: Chinese exporters of two product categories meet superlative absolute and relative performance criteria.

Relative performance
Cell entries refer to the number of
product categories, total value of U.S.
Row total
Imports from China in 2024, and
import
examples of products in cells where Q1: China share Up, Q2: China share Down, Q3: China share Down, Q4: China share Up,
value
more than $10 billion of trade is price advantage Up price advantage Up price advantage Down price advantage Down
involved China Undercuts China Retreat China Selective China Storming

Q1: Higher Volume, Higher Price 2 products 1 product 0 products 3 products

$6 billion
Rising Sourcing Costs $3 billion $1 billion $0 billion $3 billion

11 products
6 products 5 products
$27 billion
Q2: Lower Volume, Higher Price $13 billion $13 billion 2 products
Batteries, Computer $54 billion
Volume Retreat Toys, Party decorations, TVs & Radios, Phones, $1 billion
parts, Passenger
Wires & Cables Plastic materials
Absolute performance

vehicles

8 products
17 products
$13 billion
Q3: Lower Volume, Lower Price 5 products $85 billion 1 product $108
Monitors, Kitchenware,
China Defensive $9 billion Smartphones, Laptops, $1 billion billion
Cameras and video
Christmas ornaments
equipment

17 products 10 products
$16 billion $10 billion
Q4: Higher Volume, Lower Price 4 products 2 products
Toys, Exercise Batteries, Plastic $31 billion
Super-Competitive $4 billion $1 billion
equipment, Steel materials, Thermos
household articles bottles

Column total import value $41 billion $103 billion $50 billion $6 billion

Note: The discrepancies between the row and column totals in this table and in the quadrants in Figures 1 and 2 are due to the fact that the calculations for the absolute and relative
assessments could not be performed for every product category. The totals reported in this table are for the 94 product categories where both calculations were possible.
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