In response to the steep U.S. tariffs, Chinese apparel exporters are shifting a significant portion of their volume toward the EU. This surge in low-priced goods — often via e-commerce platforms like Shein and Temu — is putting intense pressure on European textile producers. At the same time, the EU’s permissive €150 duty-free threshold for small parcels is coming under fire as a significant loophole.
In the first half of 2025, Chinese exports of textiles and clothing to the EU grew by around 20 percent in both value and volume compared to the same period in 2024, according to Euratex. That increase largely reflects rerouting: faced with higher U.S. tariffs, Chinese manufacturers are seeking alternative markets, and Europe has become a natural outlet.
The European Central Bank has projected that this trade diversion could even dampen inflation in the euro area by up to 0.15 percentage points as cheaper imports flood in. Chinese industry reports also describe a broader “pivot” in export strategy: front-loading shipments ahead of tariff deadlines, scaling up e-commerce exports, and diversifying supply chains to reach Western markets through new logistics hubs.
One of the leading structural enablers of this surge is the EU’s de minimis exemption, which allows small parcels valued below €150 to enter without incurring customs duties. That rule has made ultra-low-cost Chinese offerings highly competitive in the European market.
By contrast, the U.S. has effectively closed similar loopholes; nearly all imported parcels now face a minimum duty. The European Commission has proposed eliminating the €150 threshold and introducing a flat €2 handling fee for small parcels, with a reduced fee of €0.50 for items shipped from within European warehouses.
This change would significantly impact platforms like Shein and Temu — in 2024, approximately 91 percent of small parcels entering the EU originated in China. China’s Ministry of Foreign Affairs has already criticized the proposal, saying it would distort trade and calling for a “fair, transparent and non-discriminatory” approach.
The shift in trade flows is already shaking Europe’s manufacturing base. Textile associations warn of risks from dumping, unsustainable price competition, and erosion of domestic production capacity. The European textile and fashion sector contributes about €170 billion annually and supports roughly 1.3 million jobs.
Industry groups are demanding faster reforms, urging the European Commission to eliminate the de minimis threshold by 2026, rather than 2028. Some associations have even proposed higher parcel fees — up to €20 — to finance customs checks and strengthen border controls. French and Italian brands are running campaigns encouraging consumers to buy local, highlighting the economic and environmental cost of fast fashion imports.
Economists warn that the flood of cheap imports could exert deflationary pressure across Europe. The ECB has noted similar effects in previous trade cycles, where redirected Chinese exports have lowered price levels.
There is also growing concern over dumping practices — selling goods at a loss — and distortions in the textile value chain. European producers are calling for stricter anti-dumping measures and more transparent oversight of digital marketplaces.
Diplomatically, this issue is becoming a flashpoint. Beijing has already voiced strong objections to the EU’s small-parcel fee proposal, signaling potential tensions in broader EU-China trade relations.
Monitor customs reform proposals closely. The fate of the €150 threshold and any new handling fee will directly affect pricing and competitiveness.
Reassess sourcing strategies. European brands may need to emphasize traceability, near-shoring, or sustainable materials to compete on non-price factors.
Strengthen brand differentiation. Quality, durability, and environmental performance can justify premium positioning against low-cost imports.
Engage in trade advocacy. Industry associations and chambers of commerce can help shape balanced regulatory outcomes.
Plan for regulatory shifts. If new duties or fees are introduced, cross-border e-commerce margins could tighten faster than expected.
China’s rerouting of apparel exports toward Europe highlights how global trade dynamics can shift overnight under tariff pressure. While European consumers may benefit from cheaper goods in the short term, the long-term challenge for the EU lies in maintaining industrial competitiveness, fair taxation, and sustainable production across its fashion ecosystem.
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