🇪🇺💼 E-Commerce Supremacy? 7 Shockwaves as Europe Disrupts Chinese Platforms
A new fight for digital dominance heats up
Just months after officially imposing tariffs on Chinese-made electric vehicles (EVs), the EU is again going after Chinese exports, albeit without specifically naming China.
On February 5, the EU unveiled a new strategy to overhaul the e-commerce market: a “Comprehensive EU Toolbox for Safe and Sustainable E-commerce.” It has multiple pillars, including “reforming customs” throughout the bloc to ensure that “low-value” imports (anything priced under €150) would be subject to a tax. It also boosts “market surveillance," enabling the EU to raise the heat on any platform or line of goods that poses a “risk” to society. Alongside all this, the EU has proposed a new levy, a tax on imports, that was phrased in a very interesting way: a “non-discriminatory handling fee.”
None of this directly mentions China. However, the stats reveal how China dominates the export of low-value goods. For example, 91% of goods priced under €150 last year came from China—around 4.6 billion parcels. Separately, at least 45% of European online shoppers have purchased a product from a Chinese platform in the past 12 months.
In addition, last October, the EU opened an investigation into Temu, and just days after unveiling the new “toolbox,” Brussels informed Shein that a new probe had been launched. This probe will investigate the entirety of Shein’s operations, from illegal goods to unfair pricing models, all of which may break European consumer protection laws.
It is clear that China dominates part of Europe’s e-commerce landscape.
The timing of the EU’s new e-commerce moves is curious. It comes just a week after the world’s largest single market launched its “Competitiveness Compass” in a bid to restart the bloc’s economic engine and ensure that Europe is not dominated by the US and China.
However, by targeting Chinese e-commerce, Europe is attempting to “chip away” at an integral part of the Chinese global footprint. It is doing so at a pivotal moment for China, the West, and the world.
The outcome may not be what Europe intends.
There are 7 big shockwaves as Europe goes after China’s e-commerce supremacy.
📣 POPULAR INSIGHTS ON THIS TOPIC
7 SHOCKWAVES 👇
Europe may not be able to use China to offset Trump: Since Trump’s return to the White House, European policymakers have been deliberating how best to counter Trump’s bold ideas. This includes Europe purchasing large quantities of American liquified natural gas (LNG), lowering tariffs on American car imports, and NATO members contributing more to the alliance. None of this, however, is guaranteed to maintain transatlantic stability. Therefore, the EU has been looking to maintain a certain status quo with China, which can offset friction with America. The e-commerce push challenges this strategy. The EV tariffs, coupled with future limits on the likes of Shein and Temu, could further capsize the EU-China relationship. After Europe imposed the EV tariffs, China told its automakers to pause expansion in member states who voted for the levies. If Europe imposes new e-commerce rules, disrupting Chinese platforms, Beijing could order a new set of slowdowns, divestments, or bans in Europe. Instead of romance, Europe could be fighting China and America at the same time.
Without China, Europe is beholden to America: The largest e-commerce platform in Europe is Amazon. In 2023, Amazon generated almost 53 billion euros in the European market, compared to Shein, which made around 7.6 billion euros. While Amazon is also part of the new European e-commerce toolbox, the bulk of the spotlight is on China. The existing EU push to de-risk from China could drive Europe to take bold action against Chinese low-value goods, like fast fashion, that are dominating the region. When Trump imposed his new 10% tariff on China last week, he also removed the rule that allowed packages valued at less than $800 to enter the US without duties. This, in turn, forced the US Postal Service (USPS) to pause package delivery from China and Hong Kong, effectively paralyzing a certain flow of trade. This is what is at risk now. However, the moment the EU curbs Chinese parcels, it will give American platforms further domination in the market. At a time when Europe wants to establish economic sovereignty (from the US and China), the new e-commerce rules could end up doing the opposite. Europe’s digital space could be more Ameria-centric than it has ever been.
Permanently altered psyche of European consumers: The biggest question in front of the EU is not whether it can restrict or change the flow of cheap Chinese goods into Europe. After all, several countries are doing this, including Indonesia, which has slapped taxes, up to 200%, on cheap Chinese imports to protect local companies. The big question is whether European consumers will change their own purchasing behavior if faced with a “slight” or “significant” price hike when buying from Chinese platforms. Unless Europe imposes a 50% tariff on all cheap Chinese imports, European consumers will not budge. They will still shop at Shein, Temu, Aliexpress, etc, over the Western alternatives, especially Gen Z. And introducing a 50% tariff risks serious collision with China. This means Europe could impose slight taxes/fees/duties on certain Chinese goods that, when passed onto consumers, are just a few dollars more. The end result: European consumers are unlikely to reorient themselves away from Chinese vendors. One of the main reasons is that cheap Chinese exports, from digital stores to dollar stores, have permanently altered the purchasing behavior of Western consumers. Short of complete bans on Chinese goods, it will be impossible for people to go back to buying 1 pencil for $1 (made in Germany) when they can get 5 pencils for $1.50 (made in China). This should be at the core of how Europe thinks about its new focus on Chinese e-commerce—will consumers be influenced or redirected? Or has the psyche of European consumers permanently changed?
Conditions are being set for state-controlled e-commerce: The Chinese e-commerce fight is not in isolation. Taken in conjunction with calls for a new kind of European competitiveness, slowing economic growth, and fears that European sovereignty is disappearing, Brussels is being pushed towards creating local alternatives for key sectors. This is already happening, like Gaia-X, a European push to build a local cloud computing network. This could apply to e-commerce, too. To ensure Europe is not dependent on American or Chinese platforms, the EU could create a new European e-commerce platform through which global merchants and suppliers, including Chinese and American, can sell. The platform could be subsidized by the EU, including sales and discounts, to drive traffic. But, the end result could be new, state-controlled e-commerce in the West caused by a mix of geopolitics, economics, and social changes.
European digital rules are being repurposed: Part of the new e-commerce toolbox revolves around Europe’s two main digital regulatory frameworks, the Digital Markets Act and the Digital Services Act. Europe wants to apply these rules to e-commerce platforms to ensure they meet European data rules, content moderation laws, and more. This represents an expansion of Europe’s key public policies beyond the usual “Big Tech” (i.e. Meta, X, Alphabet, Apple). It means two things. First, the definition of Big Tech now includes Chinese platforms like Shein, Temu, and others. Second, the conduct of these businesses could activate the EU’s digital regulations and, in turn, could cause new friction between the EU and other governments. Already, Trump has sounded the alarm on Europe going after American technology firms. Europe has warned that if Trump launches a trade war, one of the ways it will hit back is by targeting US Big Tech. The likes of Shein and Temu are being drawn into this environment. What these companies do (or do not do) could begin to define the relationship between Europe and China. Treating Shein and Temu as Big Tech opens the door to a brand new dimension.
Chinese firms begin to shift away from Europe: A decoupling between the West and China would take decades to occur. That is why many pour cold water on such ideas. However, the next investments that Chinese companies make could begin to skip certain Western markets. This is a kind of “future decoupling.” As Western governments raise the heat on Chinese trade, from physical to digital, Chinese firms will likely invest deeper in Asia and the Middle East. Already, Shein is preparing to reenter India through a partnership with the Indian conglomerate Reliance. In India, Shein will then build factories to export goods to the Middle East, making India both a consumer and logistics market. Such tie-ups could materialize elsewhere in the region as Chinese firms “skip” Europe. However, the regional business landscape is quickly changing for China. In Indonesia, the government is imposing tariffs and bans, not allowing Temu to enter the country. In Vietnam, Shein and Temu have been suspended in the country for failing to register for a new business license. And, while markets like India are highly lucrative, they could disappear in the blink of an eye if India-China relations nosedive tomorrow, like over the Chinese super dam in the Himalayas.
After EVs and clothes, Europe’s next targets: It is clear that China’s economic integration with Europe is no longer acceptable in Brussels. First EVs. Now cheap clothes. After this, there are several other areas Europe could target, starting with Chinese cloud computing offerings. In Asia, the largest cloud provider is now Alibaba, trumping AWS, Azure, and Google. This remarkable growth could soon be replicated in Europe, creating serious national and economic security fears for Brussels, Washington, and London. It is not too outlandish to imagine Europe taking preemptive steps to ensure Western cloud firms remain the backbone of Western economies. After EVs and clothes, the EU might target Chinese cloud offerings, either probing them or outright banning them. This, of course, would permanently alter the EU-China relationship. However, the EU also has limits, creating new hurdles. One of them is that China’s “new footprint” is not just in the EU but just outside of it too, like in Serbia. China could leverage these nations, building them into logistics hubs or manufacturing bases for export into European markets. No longer will China be selling “Made in China” goods but rather “Made in Europe.”
CONCLUSION
Policymakers in Europe are effectively scanning the entirety of the European economy, identifying which industries need to be redesigned and rewired. The end goals are multiple: a new era of European economic growth, a restart of Europe’s competitiveness engine, and the establishment of a “third pole” (Europe) alongside the US and China.
None of this is guaranteed to occur. Europe currently faces more challenges than opportunities. But regardless of the outcome, Europe is starting to move certain pieces into position. In doing so, it will redefine its ties and links with the world’s largest economies—like China.
Tariffs on EVs opened the wound. Duties on cheap clothes keep the wound open. Now, whether it is cloud computing or something else, Europe's next moves will cause more bleeding.
While all the focus is on Europe’s e-commerce toolbox ideas, less spotlight is on China. Will China retaliate? For now, Beijing is likely to sit back and observe. Eventually, after repeated moves across several types of trade, China will be forced to retaliate.
At that moment, China could redefine its relationship with Europe, aware that Brussels is not interested in further discussions or deals. In doing so, China could be the one causing Europe to bleed, internally and externally, as Beijing seeks to protect itself from what is to come.
-ABISHUR/MR. GEOPOLITICS
Terms/Conditions
Mr. Geopolitics is a commercial service providing actionable insights to leaders. All Mr. Geopolitics content is the property of Abishur Prakash/The Geopolitical Business, Inc., and is protected under Canadian Copyright Law. This includes, but is not limited to: ideas, perspectives, expressions, concepts, etc. Any use of the insights, including sharing or interpretation, partly or wholly, requires explicit written permission. If you would like to discuss options, please contact: mrgeopolitics@substack.com.
Want to republish this insight? Let’s talk: mrgeopolitics@substack.com.
If you like Mr. Geopolitics, your colleagues might too.
Feel like doing something unique for somebody important?