The Reconfiguration of Trade Relations Between the European Union and China

The trade relationship between the European Union (EU) and China has undergone a significant structural transformation in recent years, marked by the gradual erosion of the model of interdependence that had been in place since China’s accession to the World Trade Organization (WTO) in 2001. What was once seen as an economically beneficial partnership for both sides has become, in the European Commission’s own assessment, an “unsustainable” relationship. The data clearly illustrate this imbalance: in 2024, the EU exported goods worth approximately 213 billion euros to China, while it imported products worth about 519 billion euros, resulting in a trade deficit of over 300 billion euros. This situation is exacerbated by Europe’s growing dependence on strategic inputs of Chinese origin: it is estimated that 98% of the solar panels imported by the EU, 88% of the lithium-ion batteries for electric vehicles, and 98% of the rare-earth magnets used in the bloc come from China, giving Beijing considerable leverage over European supply chains.

Against this backdrop, the EU has sought to redefine the terms of its relationship with China by adopting what it calls a “de-risking” strategy—that is, reducing risks and dependencies without completely severing trade ties. This reorientation is not new, but it gained decisive momentum starting in 2023 and deepened throughout 2025 and 2026. Tensions were exacerbated, in particular, by the phenomenon of Chinese industrial overcapacity—a situation in which Chinese production far exceeds domestic demand, leading to the export of products at artificially low prices that distort markets and threaten European industries in strategic sectors such as electric vehicles, steel, chemicals, and solar energy. This situation has prompted Brussels to adopt ad hoc trade defense measures (such as tariffs on Chinese electric vehicles, approved in October 2024) and to discuss more comprehensive industrial protection instruments, such as the Industrial Accelerator Act and the “Made in Europe” initiative, signaling a paradigm shift in European trade policy.

At a meeting held on May 29, 2026, the European Commission discussed a set of proposals aimed at protecting European industry from the surge in Chinese imports, formally acknowledging that the current situation is unsustainable. The measures under consideration include the creation of new currency safeguard mechanisms, the imposition of quotas to force European companies to diversify their suppliers, and the introduction of sector-specific tariffs on chemicals, metals, and clean energy technologies. The formal announcement of specific legislative proposals is scheduled for the third quarter of 2026, following the EU leaders’ summit scheduled for June 18 and 19. The speed at which these discussions are progressing—and the very content of the statements by Commission President Ursula von der Leyen, who affirmed that the EU will defend itself against imbalances and excess capacity in global trade—indicate that the adoption of some form of additional protectionism is not only likely but politically inevitable.

Beijing’s response was immediate. On May 30, 2026, China’s Ministry of Commerce issued a formal statement warning that, should the EU proceed with restrictions deemed discriminatory, China will respond firmly and take effective measures to protect its own interests. Beijing also threatened to launch trade investigations against the bloc if the European instrument on industrial overcapacity is approved. However, the same statement emphasized that diplomatic channels remain open and that the two sides are discussing the creation of a consultation mechanism on trade and investment—suggesting that, despite the confrontational tone, neither side desires an irreversible rupture. The ambivalence of China’s stance reflects the complexity of the situation: China needs the European market to sell its products and avoid economic isolation amid growing tensions with the United States, while the EU, for its part, cannot ignore its deep dependence on critical inputs from China. This asymmetric interdependence makes an open conflict costly for both sides, but does not rule it out, especially if domestic pressures within each bloc override diplomatic pragmatism.

It is clear, then, that the European Union’s adoption of some form of additional protectionism is not only likely but politically inevitable. The European Commission itself formally acknowledged in May 2026 that the current situation is unsustainable, with a trade deficit exceeding 300 billion euros in 2024, combined with critical dependencies in sectors such as solar panels, electric vehicle batteries, and rare-earth magnets, all of which have Chinese market shares exceeding 88%, making the pressure for action difficult to resist politically.

As for Chinese retaliation, it is likely to be equally calculated. Beijing has already signaled, in a May 30, 2026, statement, that it would respond firmly and adopt effective measures if European restrictions were deemed discriminatory, even going so far as to threaten trade investigations against the bloc. However, the same statement made a point of keeping diplomatic channels open and mentioned the possibility of creating a bilateral consultation mechanism—a deliberate ambiguity that reveals the limits of the confrontation China is willing to undertake.

This ambivalence has structural roots. China depends on the European market to offload its surplus production and avoid economic isolation amid growing tensions with the United States, while the EU cannot sever its ties to critical Chinese inputs without incurring considerable transition costs. This asymmetric interdependence makes open conflict costly for both sides, pointing to a more likely outcome of controlled escalation: incremental European protectionism, selective Chinese retaliations, and parallel negotiations—without an irreversible rupture—at least as long as diplomatic pragmatism withstands domestic pressures within each bloc.