International Conference on Economics, Finance & Business, Prague

TARIFFS IN EU–CHINA TRADE: AN EMPIRICAL GRAVITY MODEL APPROACH

DOMINIKA CHOROŚ-MROZOWSKA, MAMCARCZYK MARIOLNA

Abstract:

Contemporary trade relations between the European Union and China are characterized by a high volume of exchange but also by significant structural and institutional asymmetries. Despite the general trend toward trade liberalization, tariff barriers continue to play an important role in shaping trade flows. Their impact on foreign trade becomes particularly relevant in the context of changing tariff policies, geopolitical tensions, and the post-pandemic reconfiguration of global supply chains. The aim of this presentation is to conduct an empirical analysis of the impact of tariffs on bilateral trade between the European Union and China using an extended gravity model. The study incorporates tariff-related variables as key determinants of trade flows, allowing for a more precise assessment of the effect of trade policy on the intensity of exchange between the two partners. The analysis is based on panel data for selected strategic sectors, including machinery, transport equipment, and chemical products. The results indicate that tariff variation clearly correlates with trade volume and, in some cases, produces an asymmetric effect—more strongly limiting EU exports to China than vice versa. This perspective provides a basis for further discussion on the effectiveness of trade policies and the potential to optimize bilateral cooperation in the context of global economic challenges. Particular attention should also be given to the geopolitical context of the ongoing trade war between the United States and China, which raises the risk of redirecting Chinese export surpluses to the EU market. This situation increases competitive pressure on European producers and underscores the importance of research into the effects of tariffs and instruments for protecting the Single Market.

Keywords: foreign trade, tariff barriers, gravity model, European Union, China, trade asymmetries, market protection, trade war