Chinese companies look to Egypt to support exports as US-China tariffs continue to rise

Amid the ongoing trade tensions with the United States, Chinese companies are progressively turning to Egypt as a crucial center for investment and production.

Mostafa Ibrahim, Deputy Chairman of the China Committee at the Egyptian Businessmen’s Association, forecasts that Chinese investments in Egypt will reach between $2 and $3 billion by 2025.

This comes as China aims to reduce the impact of rising tariffs from the US and explore new opportunities outside of its borders.

Ibrahim noted that between 20 and 30 Chinese companies are seriously considering expanding into the Egyptian market this year, particularly targeting industries that are highly export-oriented, such as ready-made garments, textiles, home appliances, and technology.

A significant portion of these investments is expected to be directed toward the Suez Canal Economic Zone (SCZone), an area that has become a focal point for Chinese companies looking to establish a strong presence in Egypt.

Ibrahim emphasized that nearly two-thirds of the Chinese investments will be directed to areas near the Suez Canal, while the remaining third will focus on other industrial zones within Egypt.

Ibrahim pointed out that Egypt’s low-cost labor, combined with its large domestic market of over 100 million people, makes it an ideal destination for Chinese manufacturers looking to cut costs while also tapping into a substantial consumer base.

Egypt’s favorable trade agreements with both the US and Europe also allow for goods manufactured there to bypass the tariffs that have been imposed on Chinese exports.

These make Egypt an increasingly attractive alternative for Chinese companies looking to sustain their access to these crucial markets.

Additionally, Egypt's economic policies are designed to attract foreign investment, with special economic zones like the SCZone offering attractive incentives for foreign companies looking to establish manufacturing operations.

Ibrahim highlighted that China’s relationship with Egypt has evolved over the years, with Egyptian officials regularly hosting delegations from various Chinese provinces to explore new investment opportunities.

Since the beginning of 2025, such delegations have been visiting Egypt every 10 days, underscoring the serious interest China has in expanding its economic footprint in the country.

Ibrahim suggested that the steady flow of Chinese delegations to Egypt signals a shift in how Chinese companies view the country.

With over 2,000 Chinese companies already operating in Egypt, contributing more than $8 billion in investments, Egypt has become one of China’s largest and most important trading partners in the region.

The trade war between the US and China has led to escalating tariffs, particularly with the recent increase in tariffs on all Chinese imports to the US, which now stand at 20 percent.

In response, China has retaliated by imposing tariffs on US agricultural products and industrial goods, further complicating trade between the two countries.

These tensions have pushed many Chinese companies to seek alternative manufacturing bases that can help mitigate the effects of these tariffs and safeguard their exports to key markets.

Egypt's role as an alternative manufacturing and export hub is becoming increasingly significant in this context.