EU-China trade war: Brussels is arming itself
China's EU trade surplus jumped $22 billion in a year. Brussels has five tools — but using them requires a unity that doesn't yet exist.
At a Glance:
China’s trade surplus with the EU hit $113 billion in the first four months of 2026, up from $91 billion over the same period in 2025 — a 24% increase in one year.
The European Commission is preparing a five-instrument arsenal: supply chain diversification, sectoral tariffs, reinforced anti-dumping investigations, an anti-coercion tool, and diplomatic coordination among member states.
Political unity remains the weakest link: Germany, Spain, and other capitals maintain commercial and investment ties with Beijing that complicate any coherent EU-wide response.
This image is used for illustrative purposes only.
The numbers: a trade imbalance spiraling out of control
The EU’s trade deficit with China already reached €359.9 billion (approximately $390 billion at current exchange rates) in 2025. Chinese customs data for the first four months of 2026 suggests the trajectory is accelerating: Beijing accumulated a $113 billion surplus with the EU, up from $91 billion over the same period the previous year. Twenty-two billion dollars in twelve months — a trajectory that, if sustained, would put the imbalance at an unprecedented level by year’s end.
The underlying dynamic is well understood: Chinese industrial overcapacity — in steel, chemicals, and electric vehicles — is seeking export outlets as domestic demand shows signs of weakness. The EU’s single market — the unified trading area shared by 27 member states — vast and relatively open, is the natural target. In recent weeks, Beijing has repeatedly threatened retaliatory measures against several European laws restricting Chinese companies’ access to the single market. It also barred those companies from engaging with the Commission in the context of EU foreign subsidy investigations — a move that reads, at minimum, as a deliberate escalation.
This sequence — rising commercial pressure, retaliation threats, and obstruction of regulatory proceedings — resembles a coordinated deterrence strategy, though the degree to which it is centrally directed within China’s state apparatus remains difficult to establish.
The EU’s arsenal against China: five tools, five constraints
European commissioners are set to debate the China question and attempt to restore a level playing field on May 29. Five options are on the table.
Diversifying strategic supply chains. A plan is being developed within the Commission that would require EU companies to source critical components from at least three different suppliers. The proposed thresholds would cap single-supplier purchases at roughly 30 to 40 percent of procurement, with the remainder spread across at least three suppliers from different countries. The move is a direct response to China’s restrictions on rare earth and semiconductor chip exports, introduced last year. Its implementation, however, would impose structural cost increases on industries already under pressure — and no compensation mechanism has been proposed.
Targeting sectors with tariffs. In its economic security strategy unveiled last December, the Commission announced new trade defense tools to be unveiled by September 2026 to better shield EU industry from unfair commercial practices and overcapacity. Tariffs on steel imports — dominated by Chinese overcapacity — were already doubled in April, following approval by EU member states and the European Parliament. The chemical industry is now in the crosshairs: Chinese chemical imports have surged 81% over five years. Yet the sector’s export dependency — it generates over 30% of its revenues abroad, including in China — complicates any measures targeting Beijing and raises the real prospect of asymmetric retaliation.
Accelerating anti-dumping investigations. The Commission can levy duties on Chinese companies selling below domestic market prices or benefiting from unfair subsidies. But investigations can take up to 18 months to conclude, and the caseload is piling up at the Commission’s trade directorate, which has only around 140 officials to handle it. That staffing level is manifestly disproportionate to the volume of active disputes.
Deploying the anti-coercion instrument. Conceived as a last-resort measure — the EU’s trade equivalent of a bazooka — the Anti-Coercion Instrument (ACI) could be used when a third country applies economic pressure on the bloc. It would allow the EU to restrict Chinese companies’ access to EU licenses or public procurement contracts. However, activation requires a qualified majority of member states, which is far from guaranteed.
Unifying member state positions. This is where the strategy is most vulnerable. Germany voted against the EU tariffs on Chinese electric vehicles adopted in 2024. Spanish Prime Minister Pedro Sánchez — who has visited China four times in three years — has consistently favored closer ties with Beijing and is actively courting Chinese investment. These fault lines give Beijing leverage to play European capitals against each other, as this sequence would suggest.
Analysis: the EU has the tools — but not yet the political will
It is tempting to read Brussels’ inventory as a show of strength. That would be a misreading. All five instruments exist; each runs into a constraint — administrative, economic, or political — that conditions their real-world effectiveness.
The telecommunications sector illustrates this with precision. The Commission has proposed a mechanism to phase out so-called high-risk vendors — including Huawei and ZTE, both of which are subject to national security concerns across Western democracies — from strategic industries, beginning with telecoms. The proposal has sparked resistance from Spain and Germany, which have long relied on Chinese equipment now deeply embedded in their digital infrastructure. European telecom operators are demanding financial compensation to replace that equipment, comparable to the U.S. “rip and replace” program funded by Congress. Neither the EU nor member state governments appear willing to foot the bill.
This pattern — member states acknowledging a systemic problem without absorbing its cost — suggests that EU trade policy toward China may remain more rhetorical than structural. The Commission can set the framework. It cannot compel capitals to implement it.
EU Trade and Economic Security Commissioner Maroš Šefčovič has stated publicly that Europe will fight for every European job and every sector if it faces unfair treatment. That political commitment is clear. What it says nothing about is the balance of forces within the Council of the EU — the body of member state governments where these decisions are ultimately made.
The bottom line
The real question is not whether Brussels has the instruments to respond. It is whether Berlin, Madrid, and the others are prepared to pay the price.
On paper, the EU has a coherent commercial arsenal. But between having tools and deploying them in a coordinated fashion lies the political space that Beijing could seek to exploit — playing European capitals against each other, as this sequence would suggest.
Sources: Euronews · Cefic (via Euronews)