EU plans new measures to curb China trade deficit amid commercial‑war concerns

The European Union is confronting a widening trade imbalance with China, with a deficit of €98 billion in the first quarter of 2026 and a record daily shortfall of about €1 billion in April. EU leaders agreed to develop new tools aimed at correcting macro‑economic imbalances while avoiding an escalation into a full‑blown trade war.

The response seeks to balance protection of strategic European industries with the risk of retaliation from Beijing. Internal positions vary: France pushes for stronger industrial autonomy, Germany favours a pragmatic approach given its export exposure, and Spain adopts a more moderate stance, emphasizing dialogue. The plan was debated at the recent G7 summit and the European Council, emphasizing a two‑pillar strategy of European unity and engagement with major economic partners.

Analysts refer to the situation as a “China shock 2.0”, reflecting the deep integration of Chinese components in European supply chains—particularly in the German electric‑vehicle sector—while also highlighting dependence on Chinese raw materials and technology. The EU aims to adjust its regulatory and competitive framework without imposing punitive tariffs that could backfire on European economies.