The European Union is bracing for a confrontation with China as a trade deficit exceeding $1 billion a day heightens anxiety over potential job losses and pushes the bloc’s political leaders to take a more aggressive approach toward its second-largest trading partner.
The European Commission’s top trade envoy, Maros Sefcovic, will be in Beijing on Thursday (October 8, 2026) for a two-day meeting with Chinese Commerce Minister Wang Wentao. The goal is to narrow the EU’s 360 billion euro ($410 billion) trade deficit with China. Earlier this year, he gave Beijing a deadline of October to provide meaningful results in doing so.
Politicians and economists across the 27-nation bloc consider China’s massive subsidies and exports a major threat to core industrial sectors from steel foundries to car factories. China diverted many of its exports to the EU and other markets after the U.S. raised tariffs.
In a debate on Tuesday (October 6, 2026) in the European Parliament in Strasbourg, lawmakers overwhelmingly expressed anxiety alongside defiance over trade with China. On Wednesday (October 7, 2026), they voted 454 to 86 on a resolution to toughen up on China that centred on a call for “economic reciprocity and a proportionate EU response if China does not open its markets.”
Ahead of the vote, Hilde Vautmans, the Belgian lawmaker who led the resolution, said that “Europe has economic power; it’s time we used it.”
EU options range from tariffs to a “trade bazooka”
Despite the seeming European unity this week, it remains unclear what the EU can or is willing to do. It has already rolled out trade measures against Chinese steel imports and e-commerce small parcels.
France’s High Commission for Strategy and Planning in February called for swift action, like 30% tariffs on many of China’s exports, and a devaluation of the euro against the Chinese currency. Sales of German autos are plummeting in China, but China is also poised to gobble up market share in Europe by undercutting European automakers on price thanks to heavy state subsidies. There have already been mass layoffs at major manufacturers like Volkswagen.
A letter by France and Germany, a copy of which was seen by The Associated Press, called for a sweeping rethink of the EU’s China policy. Among other actions, it proposed making it easier for the European Commission to use the bloc’s so-called “trade bazooka”, the Anti-Coercion Instrument. This is a never-before-used raft of measures for blocking or restricting trade and investment from countries found to be putting undue pressure on EU member nations or corporations.
Yet not all EU nations agree on such tough measures. Spain, the eurozone’s fourth-largest economy, has been less adversarial toward China in recent years. Prime Minister Pedro Sanchez has visited Beijing four times in three years.
The European Policy Centre in Brussels said in June that European battery producers, solar panels, steel, electric vehicles, chemicals and machinery are already haemorrhaging jobs and capacity and called for a trade investigative body modelled on Section 301 of the U.S. Trade Act.
European Commission President Ursula von der Leyen called the phenomenon another “China shock” for Europe, similar to what happened in the U.S. in the early 2000s when hundreds of thousands of factory jobs in the American heartland were wiped out.
The EU’s ailing economy requires both a domestic overhaul and a more aggressive foreign trade policy, especially with China, said Tim Ruhlig, a China analyst at the European Union Institute for Security Studies, the bloc’s internal think tank.
Mr. Ruhlig also said that European businesses and political leadership bear some blame.
“It’s clear that just protecting yourself from China is not the future,” Mr. Ruhlig said. “But to have a chance of making yourself ready for future technologies and to remain competitive in the coming 15-20 years, you have to protect yourself.”
It is impossible to disengage completely with China as the EU did with Russia following its invasion of Ukraine, Mr. Ruhlig said, but there is robust momentum now to reset trade relations with Beijing.
“Where do we make ourselves independent or at least more diverse? And where do we still work with the Chinese?” Mr. Ruhlig asked.
China is ready for a long trade dispute
This week in Beijing, when asked about the letter penned by France and Germany, a spokesperson at China’s Ministry of Commerce said that the countries should refrain from encouraging the EU to resort to protectionist measures.
“Protectionism cannot enhance competitiveness, and decoupling or cutting off supply chains will only harm others without benefiting oneself,” the Commerce Ministry said in a statement.
China is the EU’s second-largest goods trading partner after the U.S., according to European Commission data. Chinese exports to the EU rose 15.3% in the first eight months of this year, according to China’s customs agency, while its imports from the EU rose 6.2%.
“The EU does not have the capacity to wage a trade war against China,” read an editorial last month in China’s state-run Global Times newspaper. “If it is truly determined to do so, then let it try.”
China’s exports to Europe, as well as Southeast Asia, Latin America and Africa, expanded after U.S. tariffs went into effect last year, but it still booked a $1.2 trillion trade surplus globally in 2025. So far, China’s export machine has remained remarkably resilient despite U.S. tariffs and other trade restrictions, said Max Zenglein, Asia Pacific senior economist at The Conference Board.
This past weekend, ahead of the meeting between Mr. Sefcovic and Mr. Wang, China launched an anti-dumping probe on EU exports of p-nitrotoluene, which is used in dyes and pharmaceuticals. The probe was initiated after Beijing warned last month that it would take retaliatory actions if the EU instituted tougher protectionist trade measures.
“China has been battle-tested by successive rounds of external pressure and, so far, has largely stared down attempts to force a change in course,” said Mr. Zenglein.
China’s economy has been largely driven by exports as domestic demand remains sluggish. The EU imports sizable amounts of Chinese lithium-ion batteries and hybrid electric vehicles, and Chinese carmakers are also expanding production capacity in Europe.
While China’s trade surplus has intensified concerns among its major trading partners, trade ties between the U.S. and China appear relatively stable following a summit between Chinese President Xi Jinping and President Donald Trump in Washington, wrote Bank of America economists, turning the attention to China-EU relations.
When it comes to negotiations with the EU, Chinese investment in Europe is likely to be among Beijing’s bargaining chips, Mr. Zenglein added, particularly as EU member states compete to attract capital, jobs, and new manufacturing projects.
Published – October 08, 2026 11:46 am IST
