China leverages trade loopholes and EU divisions to expand industrial influence

Global trade dynamics are shifting as the United States and the European Union face challenges in curbing Chinese industrial influence. In the U.S., despite tariffs imposed since 2018, Chinese goods continue to enter the market by being transshipped through third countries such as Mexico, India, and Vietnam. A Department of Commerce analysis noted that $67 billion in Chinese merchandise was transshipped in 2025, suggesting that while Washington uses intelligence tools to track suspicious routes, it has not addressed the underlying industrial capacity.

In Europe, China is utilizing regulatory arbitrage to exploit divisions within the European Union. While Brussels seeks to impose tariffs on electric vehicles, Beijing is targeting individual member states to maintain its industrial foothold. Spain has emerged as a pragmatic partner, with Prime Minister Pedro Sánchez engaging in high-level summits with Beijing to secure agro-food exports and energy transition capital. This approach has created friction with the EU's unified commercial front, allowing Chinese investment to penetrate the European market by leveraging internal structural vulnerabilities.