On trade with China, Europe is fighting yesterday’s war

In the ongoing trade dispute between Europe and China, Brussels' latest defensive measures may prove ineffective due to a widening trade gap. In June 2026, China's customs administration announced a trade surplus with the European Union of $32.9 billion, a 27% increase from the previous year. This surge in exports is particularly evident when comparing China's trade relations with the EU's two largest economies: Germany and France.

China's trade surplus with Germany more than doubled, while it decreased by 81% with France. This trade divergence reflects the internal fractures within the EU, highlighting the disparity between its industrial powerhouse, Germany, and its member states like France. These regulatory measures, including a flat customs charge on low-value e-commerce parcels and a tightened duty-free quota on imported steel, may be ineffective in addressing the deficit, which stands at approximately €360 billion in 2025, a 10% increase since.

Over 20 anti-dumping and anti-subsidy investigations are ongoing, all targeting Chinese producers. Moreover, China's response to EU tariffs on electric vehicles has been strategic, opening investigations into European products like brandy, pork, and dairy, targeting specific sectors in France. Beijing’s actions, such as the reduction of pork duties for Spain, signify a shift towards reclaiming trade sovereignty.

Critics argue this approach may be characterized by 'divide and conquer'. China's regulatory measures include lengthy merger reviews and supply-chain guarantees, as well as export controls on rare earths and permanent magnets. Beijing's recent full minerals and materials export ban on Japan following its prime minister's remarks on Taiwan indicates the escalating trade conflict.

Despite the challenges, China's trade resilience is evident, particularly in sectors previously vulnerable to US tariffs.