In early September, a statement by European Commission Trade and Economic Security Commissioner Maroš Šefčovič directly warned that if negotiations fail to produce "tangible results" by mid-October, the EU would consider "closing its market" to China. This was not a casual complaint, but an extremely rare official threat—whereas past EU-China frictions were largely confined to sector-specific disputes over solar panels, steel, and other individual products, the threat to "close the market" signals an escalation of confrontation to the structural level of the entire industrial chain. Šefčovič further clarified that he expects China to present a preliminary action plan by early October.
I. The Widening Deficit: The Root of EU Anxiety
The immediate driver behind the EU's tough stance is the persistently widening trade deficit with China. According to Eurostat data, the EU's goods trade deficit with China reached approximately €360 billion in 2025, up about 15% from 2024, with all 27 member states recording deficits against China for the first time. In the first half of 2026, this trend continued to worsen—Chinese statistics show that China's trade surplus with the EU grew by approximately 9% year-on-year in H1 2026. In June alone, China's trade surplus with the EU reached $32.9 billion, up 27% year-on-year, setting a new record high.
Germany's case offers a glimpse of the broader picture. In the first half of 2026, German exports to China fell more than 12% year-on-year to just under €37 billion; at the same time, German imports from China continued to grow, widening Germany’s trade deficit with China from approximately €40 billion in H1 2025 to about €55 billion.
Under Chinese customs statistics, total EU-China goods trade in 2025 reached $828.1 billion, up 5.4% year-on-year. The EU is China's second-largest trading partner, accounting for approximately 13% of China's total foreign trade; while according to EU statistics, China is the EU's largest source of imports, accounting for 22.3% of its total imports.
II. The EU's Core Demands: Four Objectives
On the surface, the issue is the "deficit," but the EU's real demands are far more complex than the numbers suggest. According to publicly available information, the EU's core demands centre on four areas:
Balancing bilateral trade. The EU has explicitly proposed to "manage China's exports to Europe," hoping that China will voluntarily control the export scale of certain products while expanding European exports to China—agricultural products, medical devices, automobiles, and industrial equipment are all on its list for expanded market access. Šefčovič made it clear that negotiations must cover China's large-scale exports to the EU, obstacles to EU exports to China, and China's export control measures on critical materials.
Addressing "overcapacity." Steel, solar energy, electric vehicles, and batteries are the primary target sectors. Over the past year, China's exports of textiles, chemicals, plastics, machinery, batteries, and electric and hybrid vehicles to the EU have grown significantly. The EU believes that subsidies and overcapacity have led to unfair competition, impacting European domestic industries.
Improving market access for European companies in China. Government procurement, medical devices, and agricultural products are areas repeatedly raised by the European side. The two sides have exchanged lists of concerns and agreed to continue consultations under the Trade and Investment Balance working group.
Ensuring stable supply of critical raw materials. The EU’s reliance on China for rare earths exceeds 80%, and for certain categories reaches as high as 90%. The EU demands that China's export controls on rare earths, permanent magnets, and other materials not disrupt its supply chains, and that licensing procedures be simplified.
III. Multiple Measures Already in Effect—Well Before October
Notably, the EU's "knife" has not waited until October—multiple trade restrictions have already been implemented over the past few months:
Steel safeguard measures upgraded. Effective 1 July, the EU sharply cut its annual duty-free steel import quota by 47%, from approximately 34.5 million tonnes to 18.3 million tonnes. Out-of-quota tariffs were doubled from 25% to 50%. The new rules also introduced a "melted and poured" origin requirement to prevent circumvention via third-country transshipment.
Low-value parcel tariff exemption abolished. Also effective 1 July, the EU ended its 35-year-old tariff exemption for low-value imported parcels below €150. During a transitional period, a flat €3 tariff per parcel will apply. Chinese cross-border e-commerce platforms including Shein, Temu, and AliExpress, which control approximately 90% of the EU's small-parcel business, are directly impacted. From 2028, this will be upgraded to a five-tier formal tariff structure ranging from 0% to 17%. In 2024, the EU imported 4.6 billion cross-border e-commerce parcels valued below €150, of which 91% originated from China.
Polyamide yarn anti-dumping duties. Effective 28 July, the EU imposed definitive anti-dumping duties of 60%–67.6% on Chinese polyamide yarn.
Medical device public procurement restrictions. Effective June, under the International Procurement Instrument (IPI), the EU restricted Chinese companies from participating in EU public tenders for medical devices valued above €5 million, for a period of five years.
IV. China's Response: Consultations Cannot Be One-Sided
In response to the EU's maximum-pressure tactics, China has maintained a clear position. At a 3 September press conference, Ministry of Commerce Spokesperson Huang Ling stated that consultations at all levels between China and the EU should adhere to the positioning of a "stable and balanced critical trade partnership," and should resolve each other's concerns on an equal footing——"one side cannot unilaterally set demands or conditions, let alone threaten to close markets at every turn". She also emphasised that protectionism leads nowhere, and expressed hope that the EU would uphold free trade and refrain from sliding into protectionism.
From 31 August to 2 September, Vice Minister of Commerce Ling Ji held talks with Helena Ryding, Deputy Director-General of the European Commission's Directorate-General for Trade and Economic Security, conducting in-depth consultations on issues of mutual concern.
V. Key Timelines and Consultation Mechanisms
On 29 June, the two sides launched the "EU-China Trade and Investment Consultation Mechanism" (TIC), with four preliminary working streams: Trade and Investment Balance, Export Controls, Intellectual Property, and WTO Reform. Šefčovič plans to hold a video conference with the Chinese side in mid-September and visit China in early October.
For companies engaged in foreign trade, there are four key milestones to watch over the next two months:
Mid-September — The EU-China video conference will test whether the two sides can make tangible progress at the negotiating table.
Early October — Šefčovič’s planned visit to China; if preliminary consensus is reached, this would be a key signal of de-escalation.
15 October — EU leaders' summit, where negotiation outcomes will be assessed and next steps decided.
November — The EU's 27 member states will hold a final vote on countervailing duties on Chinese electric vehicles, deciding whether to convert provisional tariffs into definitive five-year duties. The additional tariff rates for sampled automakers currently range from 17% to 35.3%, and combined with the 10% base tariff, total duties on some models are already approaching 45%.
VI. Reminders for Foreign Trade Companies
If your business involves exports to the EU—whether new energy vehicles, steel, textiles, or cross-border e-commerce—or EU imports from China, the next two months require close attention to the milestones above. Steel and aluminium extrusion exporters should assess quota and tariff impacts and adjust pricing strategies in advance. Cross-border e-commerce sellers need to recalibrate cost structures and consider alternatives such as overseas warehousing. Electric vehicle and parts companies should monitor the November final vote and potential alternative negotiation outcomes. Medical device companies should assess the impact of IPI restrictions on participation in EU public tenders. It is recommended that affected companies prepare contingency plans in advance, closely monitor the mid-September video conference and Šefčovič’s early October visit, and adjust market strategies accordingly.