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The European Union’s trade relations with China have deteriorated in recent weeks, as the bloc attempts to address its ballooning trade deficit with Beijing and reduce its reliance on key goods and services. European leaders are also concerned about what they see as China’s unfair competition, which they blame for industrial woes and job losses across the continent.
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One of the EU’s responses to these challenges is the Industrial Accelerator Act, launched by the European Commission in March, which aims to “strengthen EU industrial competitiveness” by focusing on a range of measures, including a ‘Made in Europe’ procurement process, preferring providers based on the continent over third countries.
It also seeks to “speed up the decarbonisation of energy-intensive industries, net-zero technologies, and the automotive sector”.
The plans prompted scathing criticism from China last month, with Beijing arguing that any rules prioritising Europeans would create investment barriers and discrimination – and that countermeasures could follow.
EU Trade Commissioner Maroš Šefčovič hit back at these threats, telling Euronews last week that the EU would stand its ground over its plans to strengthen the bloc’s industrial policy.
He also warned that the EU will not hesitate to defend its industries and will “fight tooth and nail for every European job, for every European company, for every open sector, if we see they are treated unfairly”.
So, as one of the world’s most crucial trade relationships sours, the trillion-dollar question is: who will blink first in this clash of two global economic superpowers?
A trade relationship like no other
Trade between the two hegemons is massive: the EU is China’s largest trading partner, while the Asian giant is the bloc’s third largest trading partner, after the US and UK.
As of 2026, China (19-20%) and the EU (14-15%) jointly make up roughly a third of global gross domestic product (33-35%) and 30% of global trade.
In 2025, the EU exported €199.6 billion worth of goods and services to China, and imported €559.4 billion in return, a trade deficit of €359.9 billion, according to Eurostat figures.
EU exports to China are dominated by machinery, appliances, vehicles and chemicals, while imports include electrical machinery, electric vehicles, high-tech components and manufactured goods – in particular, equipment and materials crucial to Europe’s green and digital transition, such as solar panels, lithium-ion batteries and magnesium.
Compared with 2024, EU exports to China fell by 6.5%, while imports rose by 6.4%. But over the longer term, since 2015, EU exports to China have grown by 37.1%, while imports have surged by 89%.
What can the EU do?
Even though Brussels has for years complained about the harmful effects of Beijing’s state-run economic model, such as industrial overcapacity and extensive subsidies, EU member states have been unable to agree on a common line of action to push back.
Brussels has signed trade deals with Mercosur (January), India (January) and Indonesia (September 2025) to diversify EU supply chains as they look to reduce their reliance on China and the US while maintaining strong relations on key issues.
However, Trump’s tariff war has made many European leaders rethink their position on trade as they seek to both reduce their reliance on resources from individual third countries while developing their own autonomy.
Many of these same leaders have turned to China in search of trade and investment opportunities to offset those lost in the US trade war as well as to build ties with what they view as a reliable partner in maintaining the international order.
And many EU leaders have visited China this past year, including France’s President Emmanuel Macron, Irish Prime Minister Micheál Martin, Finnish Prime Minister Petteri Orpo, Portuguese Prime Minister Luís Montenegro, German Chancellor Friedrich Merz, as well as European Commission President Ursula von der Leyen and European Council President António Costa.
The EU has long sought a trade deal with Beijing, building upon the 2020 agreement in principle, which gave European investors more market access, set out rules for state-owned companies, highlighted transparency of subsidies, and banned forced technology transfer.
However, in Brussels, as the trade deficit continues to grow – China recorded a record $1.2 trillion trade surplus with the rest of the world at the end of 2025 – talks have intensified over the need to de-risk or decouple from China.
EU industry groups are now being consulted over whether Brussels can and should deploy its so-called ‘trade bazooka’, the Anti-Coercion Instrument, to push back on Beijing’s pressure to open up the EU market even more to Chinese companies and to tackle the country’s overcapacity.
Final plans are expected to be discussed at the end of the month when the European Commission holds a debate on China on 29 May.
Should the European Union take a tougher trade stance on China? Watch the latest episode of The Ring, Euronews’ weekly debate programme featuring MEPs Sakis Arnaoutoglou and Nicolás Pascual de la Parte.
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