The UK is set to receive more cheap Chinese imports as China diverts goods away from the US due to high US tariffs. China’s trade surplus passed $1 trillion despite tariff impacts on exports to America. The Bank of England notes that the UK is emerging as an attractive new market for Chinese products. Stephen Millard from the National Institute of Economic and Social Research said, "There is an expectation that given the high tariffs the US are imposing on China, that China will divert its trade elsewhere and one of those places will be the UK." Catherine Mann of the Bank of England said there are early signs of trade diversion affecting UK inflation: "Import prices have started to moderate on the back of sterling appreciation and some of the spillover of the diversion of Chinese products from the US tariff burdens to other places, including to our docks. Not a lot. Actually less than I would’ve thought. But it’s there." Official data shows China’s trade surplus topped $1tn for the first time by November. Exports to the US dropped 29% year-on-year, but exports to the EU rose 15%, and to the UK rose 9%. The Bank’s November report said tariffs are having a limited global growth impact but a slight disinflation effect on the UK due to trade diversion. UK headline inflation is currently 3.2%, with forecasts predicting a drop near the government's 2% target by mid-2026. Budget measures like energy bill relief and fuel duty cuts could lower inflation by up to 0.5 percentage points. The Bank of England recently cut its base rate to 3.75% and may cut further next year amid slower growth and rising unemployment. China is the UK's second-largest source of imports after Germany, with £70bn of goods imported in the year to June, a 4.1% increase. Key imports include cars, telecoms, and sound equipment. Millard added that increased Chinese imports could moderately lower UK import prices, contributing to slower inflation in 2026. European manufacturers are concerned about cheap Chinese goods flooding their markets. French President Emmanuel Macron said tough measures might be needed to tackle China’s growing trade imbalance with the EU. In the UK, ministers pledged to protect steel producers from subsidized Chinese imports. Despite these concerns, buyers may benefit from lower prices, easing inflation risks next year. Barclays’ chief UK economist Jack Meaning commented, "Our forecast is for core goods inflation to decelerate as we move through 2026, from about 1.5% in 2025 to below 1%. Part of that story is a more global slowdown; a reorganising of excess demand in the global economy, coming into the UK as a small open economy."