Opinion | Can Europe rebuild its strength to trade with China without fear?

To break the pattern of trade escalations with Beijing, Brussels must move beyond tariffs and invest in its own competitiveness

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Employees work on the assembly line of vehicles at a workshop of FAW-Volkswagen on December 9, 2025, in Chengdu in China’s Sichuan province. Photo: VCG via Getty Images

Published: 4:30pm, 13 Jan 2026Updated: 5:57pm, 13 Jan 2026

China and the European Union began 2026 with another trade clash. As the EU’s Carbon Border Adjustment Mechanism entered its definitive phase, Brussels tightened compliance and Beijing warned of countermeasures. However, this week, the two sides signalled progress on defusing the electric vehicle dispute; the EU issued guidance to Chinese EV exporters on submitting minimum price plans.

The juxtaposition underlines the point: even when one high-profile area shifts from escalation to technical negotiation, the relationship remains a structural trap in which interdependence repeatedly turns standards, subsidies and imbalances into flashpoints.

As relations have deepened, so have tensions. Bilateral trade is enormous – worth about €730 billion (US$852 billion) in 2024 – but, in Brussels’ words, “critically unbalanced” with the EU deficit at €305.8 billion that year.

The emblematic fight has been over EVs. Since 2024, the EU has imposed countervailing duties on China-made EVs, with firm-specific rates taking total tariffs as high as 45.3 per cent.

Beijing retaliated with probes into brandy and pork, followed by provisional duties of up to 42.7 per cent on certain EU dairy products as 2025 drew to a close. The institutional ceiling is low: the Comprehensive Agreement on Investment remains politically frozen.

China’s courtship of Europe in the late 2010s – casting itself as a fellow defender of free trade against “America first” – failed because three collisions blocked diplomacy. The first was a values collision: sanctions politics overrode economic logic. Second, a model collision: Brussels increasingly treats China’s industrial policy and overcapacity as “systemic distortions” while Beijing reads EU investigations as politicised protectionism.

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}To break the pattern of trade escalations with Beijing, Brussels must move beyond tariffs and invest in its own competitiveness

To break the pattern of trade escalations with Beijing, Brussels must move beyond tariffs and invest in its own competitiveness