EU Agrees Tougher China Trade Policy; Beijing Retaliates
BRUSSELS — The European Commission has agreed on a significantly tougher trade policy towards China following a landmark closed-door “orientation debate” on May 29, marking a major escalation in EU-China trade tensions. Beijing has responded by vowing retaliatory measures, setting the stage for a potential trade confrontation between the world’s two largest economic blocs.
Chaired by European Commission President Ursula von der Leyen and led by Trade Commissioner Maros Sefcovic, the rare Beijing-focused debate signaled a decisive shift in Brussels’ approach to its relationship with China, which the EU has long characterized as simultaneously a partner, competitor, and systemic rival.
Growing Trade Deficit Fuels Tensions
The EU’s goods trade deficit with China widened to between €359.3 billion and €359.9 billion in 2025, up nearly 18 percent from €304.5 billion in 2024, according to data from Politico and Eurostat. EU exports to China fell 6.5 percent to €199.6 billion, while imports from China rose 6.4 percent to €559.4 billion.
Sefcovic has described the deficit as “simply unsustainable,” warning in an interview with Euronews that the EU “will fight tooth and nail for every European job, for every European company, for every open sector, if we see they are treated unfairly.”
New Trade Instruments on the Table
According to research compiled from multiple sources, the Commission is considering developing a new instrument to compel companies in critical sectors to diversify suppliers away from China. Sefcovic is expected to ramp up safeguard measures in the chemicals and machinery industries. Safeguards are faster and broader than anti-dumping probes and require only a qualified majority of EU capitals to block.
A joint paper circulated by Spain, Italy, the Netherlands, France, and Lithuania, as reported by Chin@Strategy, called for aggressive use of safeguard measures and the adoption of a new “resilience tool” to be activated when European supply sources are concentrated beyond a specified threshold.
Germany’s Pivotal Position
Germany, the EU’s largest economy, did not sign the joint paper. German Economy Minister Katherina Reiche visited China from May 26 to 29 with a delegation of approximately 40 business representatives, according to the Global Times.
However, Berlin has since signaled a shift. A German government official told Politico that Germany is “open to discussing stronger trade defense measures,” adding that “things are moving in the right direction.” This shift is significant, as Germany’s support is considered critical for any unified EU approach.
China’s Warning and Retaliation Threat
Beijing has responded forcefully to the EU’s moves. He Yadong, a spokesperson for China’s Ministry of Commerce (MOFCOM), warned: “If the EU insists on pushing forward the so-called new tool and adopts discriminatory restrictive measures against Chinese enterprises or products, China will firmly take countermeasures.”
China’s global trade surplus hit a record of nearly $1.2 trillion in 2025, with US tariffs under Donald Trump redirecting Chinese exports to more open economies like Europe, according to Politico. Chinese firms have moved from low-end assembly to the technology frontier, operating in everything from electric vehicles to artificial intelligence and robotics.
Analysis: A Delicate Balancing Act
The EU’s internal divisions remain a critical factor. France, Italy, Spain, and Lithuania favor tougher measures, while Germany has historically sought a more balanced approach due to its closer trade ties with China. Jian Junbo, director of the Center for China-Europe Relations at Fudan University, described the push for tougher measures as “a misguided approach of ‘making others take the medicine for one’s own illness,’” warning it could damage bilateral trade.
French President Emmanuel Macron has called for faster action, stating that the EU is “too slow” in responding to Chinese competition. France estimates that a quarter of its exports and a third of Germany’s are “directly threatened” by Chinese competition.
What’s Next
The European Commission is expected to develop specific policy proposals in the coming weeks, which will be presented to EU leaders at a future summit. The EU Trade Commission’s official page notes that the EU remains committed to “de-risking, not decoupling” from China, while addressing “systemic imbalances” in the relationship.
China has already tightened export controls on rare earths and chips, and further retaliatory measures could include restrictions on EU firms operating in China. The coming months will test whether the EU can maintain unity in its approach and whether dialogue can prevent a full-blown trade war that would disrupt global supply chains.