While much attention has been on U.S. tariffs, trade tensions between China and the European Union (EU) are also heating up. Both sides are accusing each other of unfair trade practices, and things are getting worse.
Recently, the EU restricted Chinese companies from joining public bids for medical devices. In response, China limited imports of similar products from the EU. Also, China imposed new taxes on brandy from Europe earlier this month, something it had been threatening for a while. Both sides are now openly criticizing each other more.
According to Marc Julienne from the French Institute of International Relations, the current state of EU-China trade ties is “quite poor.” He told CNBC that a relationship once filled with promise now seems more risky than beneficial.
Why Are EU-China Relations So Bad?
Grzegorz Stec, a trade expert from the Mercator Institute for China Studies, explained that the EU and China are heading in opposite directions when it comes to trade and industrial policy.
One big issue is China’s large production capacity, which is more than it needs. To keep its economy going, China needs to export more products, but that creates problems for the EU. European countries are trying to protect their own industries from being overwhelmed by cheaper Chinese imports.
China’s economy is currently facing slow growth and falling demand. Exports, which once powered its growth, are now under pressure from global economic uncertainty.
Julienne also pointed to other major issues, like how foreign businesses are finding it harder to operate in China, and how the EU’s trade deficit with China is growing. He added that China is using trade as a weapon to pressure Europe, like when it announced brandy tariffs after the EU placed new taxes on Chinese electric vehicles.
How Did Brandy Get Involved?
The EU put tariffs (extra taxes) on Chinese-made electric vehicles last year, arguing they were too cheap and unfair to European carmakers. In response, China started investigating brandy imports from Europe. That investigation has now led to actual taxes, making it harder for EU producers to sell brandy in China.
What About the U.S.?
Some experts believe that recent U.S. tariffs could have brought China and the EU closer together. Since both face pressure from U.S. trade policies, they could have used the moment to strengthen their relationship and cooperate more.
But this hasn’t happened.
Marc Julienne noted that, instead of finding common ground, EU-China ties have gotten worse. Jean-Marc Fenet from the ESSEC Institute said one reason might be that China feels it has won its trade battle with the U.S. That makes it less interested in forming closer ties with the EU.
In fact, Beijing now worries the EU might side with the U.S. against China in future trade talks.
What Did the U.S. and China Agree On?
Despite their earlier tensions, China and the U.S. reached a trade agreement in June. The deal included some rules around rare earth metals and technology, which had been hot topics. Earlier in the year, China had restricted exports of rare earths, which are important for making things like electric vehicles, military equipment, and clean energy products. That move was part of China’s response to U.S. tariffs.
Is There Any Hope for EU-China Trade Peace?
Experts are not very hopeful. Grzegorz Stec believes a solution is unlikely, especially on key issues like overproduction and trade manipulation. He thinks China will continue using rare earths as leverage and that Europe will push harder to protect its own industries.
Stec also noted that Europe wants to be more self-reliant, while China is trying to prevent that shift, which could cause more conflict.
Fenet agreed, saying that recent EU actions show it is becoming more protective of its economy. The EU has added new trade tools and rules to defend itself, and this is already causing friction with China — as seen with the medical equipment issue.
He believes more clashes are coming, especially at the upcoming EU-China Summit on July 24 in Beijing.
Will the EU-China Summit Help?
Fenet is doubtful that the meeting — expected to involve EU Commission President Ursula von der Leyen and Chinese President Xi Jinping — will lead to progress. He said both sides are already preparing for a difficult and possibly unproductive meeting.
Bottom Line
Tensions between China and the EU are rising fast, and experts don’t expect things to get better soon. Trade disagreements, economic differences, and political pressure are all playing a role. While they could have found common ground due to shared challenges from U.S. tariffs, China and the EU now seem more divided than ever.
The upcoming summit may bring more headlines, but real solutions are still far away.