Podcast Summary: The Journal – "China's Cheap Goods Are Europe's Problem Now"

Date: January 7, 2026
Hosts: Ryan Knudsen & Jessica Mendoza (The Wall Street Journal & Spotify Studios)
Guest/Reporter: Chelsea Delaney

Overview

This episode explores how, after the imposition of new tariffs and regulatory hurdles by the US, Chinese exporters—most notably e-commerce giants Shein and Temu—have rapidly shifted their focus to Europe. The hosts and reporter Chelsea Delaney detail the economic, logistical, and social impacts of this pivot, highlighting both opportunities and controversies sparked by the influx of low-cost Chinese goods.

Key Discussion Points & Insights

1. Shein’s Arrival in Paris: Market Chaos and Local Backlash

• Opening Scene: Shein’s first permanent retail store in Europe opened in Paris in late 2025, causing both consumer frenzy and local outrage.
  • Chelsea Delaney (00:31): "Chaos, Absolute chaos."
  • Huge crowds contrasted sharply with angry protests and even a day-long strike by local retail staff.
  • Chelsea Delaney (00:45): “A lot of French retailers and politicians were very upset... Some department store workers held a strike or held a protest.”

2. Regulatory Shifts: US Crackdown Pushes China Toward Europe

• US Tariffs and De Minimis Loophole Closed
  • Trump administration ends the 'de minimis' rule allowing duty-free import of packages under $800 and imposes aggressive tariffs (up to 145%).
  • Ryan Knudsen (03:57): “De minimis is a big deal. It’s a big scam going on against our country, against really small businesses. And we've ended, we put an end to it.”
  • Chelsea Delaney (05:23): “The tariffs were huge... like if you think back to April, some of the tariff levels were like 145%. Just absolutely devastating...”
• Immediate Impact:
  • Chinese e-commerce exports to the US collapsed almost overnight with companies like Shein and Temu drastically reducing US-bound shipments and redirecting advertising budgets.
  • Chelsea Delaney (05:49): “At first this business kind of ground to a halt in the US... Exports from China of these low value packages just completely collapsed...”
  • Ryan Knudsen (06:19): “TEMU and Shein also pulled back their advertising in the US significantly. But that ad budget wasn’t left unspent... they started spending it elsewhere.”

3. Europe: The New Frontier for Chinese Goods

• Europe Was Previously Undervalued
  • Known for its bureaucracy and the complexity of cross-country regulations, Europe was until recently less attractive for Chinese e-commerce.
  • Chelsea Delaney (06:52): “Europe is underdeveloped for a lot of Chinese manufacturers... It’s bureaucratic and difficult to operate in. I think they hadn’t put a ton of resources into it until Trump's trade tensions started...”
• Sharp Increase in Chinese Exports to Europe
  • Chinese exports to the US fell 20% in 2025, but overall global exports hit a record high thanks to booming sales in Europe and Southeast Asia.
  • Chelsea Delaney (07:29): “It’s been a huge shock how effectively Chinese companies have found new places to sell... they have more than made up for that by selling to other places like Southeast Asia and in particular Europe.”

4. Establishing a New Silk Road: Logistics and Supply Chain Adaptation

• Building New Trade Networks
  • Air cargo capacity shifted from US routes to Europe.
  • New logistics ventures, such as Uzbekistan’s My Freighter, saw explosive growth.
  • Chelsea Delaney (09:37): “It’s based in Tashkent, Uzbekistan. And they've just seen this explosion in business... flying basically almost 9,000 tons of cargo every month from China to Europe.”
• Family Warehousing: A New Cottage Industry
  • Individuals across Europe are renting rooms, sheds, even dorms to warehouse goods for Chinese companies—some earning thousands each month.
  • Chelsea Delaney (10:29): “One woman we spoke to in London actually built a shed in her backyard over the summer... she can earn somewhere between three and five thousand pounds a month by doing this.”

5. Economic Opportunity and Growing Controversy

• Opportunities for Entrepreneurs, but Risk for European Brands
  • The scale of imports sparks concern among local retailers and governments about unfair competition and threats to Europe’s legacy of quality manufacturing.
  • Chelsea Delaney (12:28): “Europe also has this history of like high quality production... I think this has also very much ruffled the feathers of some of the people who think that Europe should be standing for, you know, high quality and sustainability...”
• Compliance and Scandals
  • Shein embroiled in controversies: Sales of illegal goods including a sex doll resembling a child and banned weapons like brass knuckles.
  • Chelsea Delaney (13:00): “They found illegal products on Shein’s website... they had found a sex doll that looked like a little girl.”
  • French authorities threatened to suspend Shein’s site; subsequent investigation led Shein to remove the products and ban sex dolls.
  • Reports of non-compliant products: choking hazards, toxic metals, faulty electronics.

6. Regulatory Response: Europe’s De Minimis Debate

• Slow Policy, Now Accelerating
  • EU’s original plan was to close the de minimis loophole by 2028; recent scandals and pressure sped up enforcement to begin in July 2026 (levying a €3 fee per package, then full closure).
  • Chelsea Delaney (15:07): “Europe... was moving very slowly on it... they finally said... we have to do something now.”
• Will It Change Much?
  • Chelsea notes the new logistics network is entrenched; as of now, no tariffs on these imports, just customs fees, so the business model remains attractive.
  • Chelsea Delaney (16:14): “It seems unlikely that it'll go fully away... the warehouse network these e-commerce companies are building is enormous... it still could be more advantageous to sell into Europe because Europe does not currently have tariffs...”

7. European Consumers: Demand Remains Strong

• Despite Scandals, Shoppers Love Cheap Variety
  • Social media hauls of Shein, Temu, and TikTok Shop products abound.
  • Chelsea Delaney (17:37): “People obviously want this stuff... they know a lot of the stuff is not good quality, but... you cannot find anything comparable with that price, with that variety, with that ease anywhere else. So they still love to buy it.”

8. The Ultimate Question: Did the US-China Trade War Weaken China?

• Adaptability and Resilience of China’s Export Machine
  • Despite losing market share in the US, China’s exports soared globally, and Europe is absorbing much of what the US no longer imports.
  • Chelsea Delaney (18:46): “This just goes to show, like, how adaptable the Chinese economy is... this sort of Chinese export machine has not been hurt by the trade war in the way that people thought it would be... It’s been very resilient and very adaptable.”

Notable Quotes & Memorable Moments

• "Chaos, Absolute chaos." — Chelsea Delaney on Shein’s Paris store opening (00:31)
• "A lot of French retailers and politicians were very upset about it... They went on strike for a day." — Chelsea Delaney (00:45)
• “De minimis. It’s a big deal. It’s a big scam going on against our country, against really small businesses. And we've ended, we put an end to it.” — Ryan Knudsen quoting U.S. rationale for closing the loophole (03:57)
• "Exports from China of these low value packages just completely collapsed to the U.S.... It was very, very chaotic." — Chelsea Delaney (05:49)
• “Europe is underdeveloped for a lot of Chinese manufacturers... Europe is famously bureaucratic and it’s a bit complicated because of all the different countries.” — Chelsea Delaney (06:52)
• "We're seeing this trend of what's called family warehousing... She can earn somewhere between three and five thousand pounds a month by doing this." — Chelsea Delaney (10:29)
• "They found illegal products on Shein’s website and they had found a sex doll that looked like a little girl. Yeah, that's when things really, really escalated." — Chelsea Delaney (13:00)
• "Europe, being the rules based organization that it is, was moving very slowly on it... And then we did see a breakthrough in November." — Chelsea Delaney (15:07)
• “This just goes to show, like, how adaptable the Chinese economy is... this sort of Chinese export machine has not been hurt by the trade war in the way that people thought it would be.” — Chelsea Delaney (18:46)

Timestamps for Important Segments

• Shein opening in Paris: 00:05–01:05
• US closes de minimis loophole, imposes tariffs: 03:57–05:23
• Collapse and redirection of Chinese exports: 05:49–07:29
• Pivot to Europe and logistics innovations: 07:49–11:17
• Controversy and regulatory action in France: 12:28–14:20
• Discussion on de minimis reform in Europe: 15:07–16:14
• Consumer attitudes and resilience of Chinese exports: 17:14–18:46

Tone & Language

The episode maintains a straightforward yet engaging analysis, blending narrative reporting with pointed commentary and relatable anecdotes about both the logistical marvel and community tensions arising from the rise of Chinese e-commerce in Europe. Chelsea Delaney brings an on-the-ground perspective, detailing both the benefits and challenges of the new trade flows for European locals and businesses.

Summary for Non-Listeners

This episode provides a deep dive into how geopolitical trade shifts—spurred by US protectionism—are transforming the European consumer landscape. It highlights the agility of Chinese exporters, the swift build-out of pan-European logistics, and the tensions between opportunity (for small businesses and consumers) and controversy (for regulators and local industries). In true Journal style, it's a narrative at the intersection of money, business, and power, painting a complex picture of globalization in flux.