European Union faces internal divide over China trade tensions

The European Union is navigating significant internal divisions and economic dependencies as it attempts to manage trade relations with China. While EU envoys reached a tentative deal in October to halve Chinese hybrid car exports, experts suggest the agreement may not fully protect European industries. China’s hybrid exports to the EU rose to $7.5 billion in the first half of 2026, a massive increase from previous years.

Political fractures are emerging within the bloc. Germany and France are increasingly advocating for tougher tariff measures and safeguard mechanisms to protect core sectors like automotive, chemical, and industrial machinery. This shift in Berlin marks a departure from previous resistance to trade measures against Beijing. Conversely, Spain has expressed a preference for continued separate negotiations with China.

Economic pressures remain high, with the EU facing a trade deficit with China of approximately €1 billion per day. Furthermore, Europe remains heavily reliant on Chinese supply chains, with European Commission President Ursula von der Leyen noting a dependence of over 80% on China for many critical raw materials and up to 90% for certain rare earths.