This paper mainly explores the impact of export market diversification as an important measure to deal with trade friction on firms total factor productivity. Firstly, this article focuses on the theoretical analysis of the impact mechanism, including risk diversification, reversal effect and spillover effect. Based on the sample data of Chinese manufacturing export enterprises from 2000 to 2007, this paper conducts an empirical test on the relationship between export market diversification and total factor productivity. The result indicates that export market diversification has a significant positive effect on the total factor productivity of enterprises. After considering the endogenous problem, by controlling the fixed effects, using the two-stage least square method and changing the duration of the sample for robustness analysis, the results are still consistent. In addition, the role of diversification policy in total factor productivity presents heterogeneous characteristics in terms of different types of enterprise ownership, export intensity, industry competition, trade methods, and the development degree of exporting market. Accordingly, this paper puts forward corresponding policy recommendations.