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Finbarr Bermingham

Ambassadors from the EU’s 27 member states will huddle in Brussels this week to thrash out a memorandum on critical minerals with the United States.
Underpinning the debate will be a tension that girds many elements of the bloc’s dealings in 2026: capacity versus trust.
Envoys will negotiate in the shadow of a new trade threat from US President Donald Trump, who last week shocked Brussels with a tariff investigation linked to overcapacity and forced labour of 60 economies, including China, the European Union and India.
The bloc’s top diplomat, Kaja Kallas, told the Financial Times last week that “it is important for everybody to understand that the US has been very clear that they want to divide Europe. They don’t like the European Union.”
A senior official added: “We know we cannot trust them as far as we can throw them.
“Nobody is under any illusions about Trump and the US any more.”


Yet, the Europeans believe they do not have the capacity to wean themselves off Chinese minerals alone.
The bloc’s memorandum will be non-binding, with an eye to a more formal instrument down the road that would effectively create a special trading zone for minerals made up of countries keen to decouple their supply from China.
The zone could entail tariffs on the import of Chinese rare earths to maintain demand for more expensive local alternatives, which could have a price floor to encourage production.
Some in Europe fear this could drive investment away, to which the US has suggested industrial tariffs on those that take their production elsewhere. EU sources indicated that Brussels was not quite ready for such a quantum leap in industrial policy.
In this zone, stockpiles of rare earths and other critical minerals would be sourced, mined, recycled and processed as a club.
Crucially, at a time when trust is running low, the commodities would also be stored in each participant state, lest Trump decide to keep them all for the US.
Washington has tried to steer talks with Brussels bilaterally – even the US believes it cannot break Beijing’s dominance alone – but the EU has pushed dialogue into the Group of Seven (G7) format, hosted this year by France.
From there, the arrangement could expand to as many as 40 global partners, including the likes of Mexico and India.
At G7 meetings, tensions have risen to the surface, with EU representatives asking their US counterparts how they could trust them when Trump was threatening to seize Greenland.
On the other hand, nobody is throwing resources at critical minerals like the US – except, perhaps, China.


This capacity deficit percolates through other strands of the EU’s China policy, too.
Industries argue that their complaints about Chinese dumping take too long to process, while politicians gripe that they simply lack the resources to do things more quickly or differently.
“We are trying to do everything all at once,” said one official, referring to the bloc’s push to re-arm, reindustrialise and negotiate trade pacts with large chunks of the world. “The focus is not quite right.”
This week’s summit of EU leaders in Brussels was supposed to be about the bloc’s competitiveness, widely understood as a response to China’s state-backed industrial expansion.
Now, however, it has been bumped down the agenda as the US-Israel war on Iran takes top billing. The demotion fits with a time-worn pattern.
Over the last half-decade, as crises rained in from Ukraine and Gaza to migration and transatlantic relations, well-intentioned planners have added relations with China to agendas countless times.
This has often been done in the veiled language of “de-risking”, “economic security” or “geoeconomics”, only to see it moved down the list of priorities or taken off altogether, as the issue du jour takes centre stage.
Several official sources last week lamented that the present lack of capacity was coinciding with an existential crisis for European businesses, occasioned by Beijing’s formidable industrial challenge.
In the first two months of 2026 alone, China’s exports to the EU surged 27.8 per cent year on year, according to official Chinese customs statistics.
For Germany, the uptick stood at 31.3 per cent, while France was at 31.9 per cent and Italy 36.4 per cent.
The unprecedented spike in shipments comes as industry fears being overwhelmed by cheaper Chinese competition.


“China is going global right now, and we are feeling it,” said Oliver Richtberg, head of the foreign trade department at the German Engineering Federation (VDMA).
“Our employees are decreasing. Our exports are going down. So, we are really feeling the pressure from China.
“We are in the beginning of the China shock, I would say,” Richtberg added, referring to a term popularised by economists in recent years tied to cut-price Chinese shipments putting European factories out of business.
“If China doesn’t change anything or we don’t change anything, it’s going to be a huge problem for our industry.”
When German Chancellor Friedrich Merz visited Beijing last month, many in Brussels were taken aback by the softness of his economic critique. Some observers put it down to a lack of bandwidth to think deeply about China.
Mikko Huotari, head of the Mercator Institute for China Studies, a Berlin-based think tank, called the approach “a simplification technique”.
“If the workload is so high, then you fall back to your principal paradigms,” Huotari said, before travelling to Beijing with Merz, adding that the German leader’s “response to shaping economic relations with international partners is basically competitiveness”.
The capacity issue is not limited to trade.
While countless columns and speeches have been devoted to the need for middle powers to band together to shelter one another from the shocks posed by the US and China, non-EU diplomats in Brussels are still waiting for the bloc to convert words into action.
Discussions with diplomats from the EU’s closely aligned partners have revealed frustration over a lack of effort to engage the shared challenge of de-risking and economic security as a group.
Instead, consultations with the likes of Britain and Australia have been kept in silos, with little direct planning about China.
“This is also a capacity issue,” an EU official said. “We know it’s a good idea, but we are too thinly spread.”


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‘Thinly spread’ bloc seeks this week to thrash out memorandum on critical minerals with the US, eyeing a more formal instrument down the road


‘Thinly spread’ bloc seeks this week to thrash out memorandum on critical minerals with the US, eyeing a more formal instrument down the road.


Tariffs, stockpiles, distrust: the EU’s messy bid to ditch China hits capacity problems

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}‘Thinly spread’ bloc seeks this week to thrash out memorandum on critical minerals with the US, eyeing a more formal instrument down the road

‘Thinly spread’ bloc seeks this week to thrash out memorandum on critical minerals with the US, eyeing a more formal instrument down the road