Trade ties between the European Union and China have reached a critical point. Brussels is scrambling to protect local producers from a flood of Chinese imports. The trade imbalance between the two sides already exceeds €1 billion a day.
On Friday, the parties struck a preliminary deal. Beijing agreed to limit exports of plug‑in hybrid vehicles to the EU for the next four years. China also pledged to cut tariffs on a range of European goods and to ease supplies of rare‑earth metals. EU officials acknowledge, however, that this is only a first and very tentative step.
Germany has been the chief casualty of China’s export surge. Deutsche Bank analysts say the country’s traditional export engine is faltering. China’s share of the global auto market rose from 5% in 2013 to 15% in 2025—officially matching Berlin. European machinery makers and green‑technology firms are also under intense competitive pressure.
The statistical data is stark: Chinese exports to the EU reached $560 billion, while Europe sold only $268 billion to China. Cheap imports benefit consumers but are systematically eroding the margins of European factories.
Brussels is preparing a Plan B. If Beijing’s concessions prove to be a fiction, the EU threatens to impose heavy tariffs on Chinese hybrids by 2027. France and Germany are pushing for a trade‑sanctions mechanism that can be activated within 24 hours. Economists warn, however, that tariffs alone will not win the competition. Europe urgently needs lower energy costs and less bureaucracy. So far, Mario Draghi’s vaunted reform agenda has been implemented by officials to only about 16%.