European Union and Chinese language flags are displayed aspect by aspect within the assembly room the place Chinese language Overseas Minister Wang Yi met with European Council President Antonio Costa in Brussels, Belgium on July 2, 2025.
Dursun Aydemir/Anadolu by way of Getty Photos
The U.S. tariff saga has stolen international highlight from commerce tensions between China and the European Union, which are actually heating up.
Accusations and investigations over one another’s commerce practices have lengthy been a staple of EU-China commerce relations, underpinned by issues over how home economies are prone to be impacted by competing imports.
In latest weeks, EU restrictions on Chinese language firms participating in public tenders for medical units have been rapidly met with China imposing import curbs on such merchandise. Individually, long-threatened Chinese language duties on brandy from the EU got here into power earlier this month, and each Beijing and Brussels have ramped up criticism of every one other.
Altogether, EU-China commerce relations are actually “fairly poor,” based on Marc Julienne, director of the Heart of Asian Research on the French Institute of Worldwide Relations (Ifri).
“What was as soon as a site of nice alternative and enthusiasm for the bilateral relationship has now develop into extra about dangers than alternatives,” he informed CNBC earlier this week.
A bitter relationship
EU and China relations are encumbered by many challenges and dangers typically linked to clashing financial positions, Grzegorz Stec, senior analyst on the Mercator Institute for China Research, prompt.
“The EU and China are broadly on a colliding trajectory when it comes to their commerce and industrial coverage issues,” he informed CNBC. Bones of competition embrace the problem of China’s overcapacity and commerce diversion to Europe, Stec, who can be head of the Mercator Institute’s Brussels workplace, defined.
“Beijing’s more and more urgent must export contradicts the EU’s want to guard its personal industrial base,” he added.
China’s financial system is dealing with a spot between its manufacturing capability and demand. Additionally it is battling sluggish progress, whereas exports, which lengthy boosted the financial system, have been beneath stress amid international commerce tensions and decrease demand.
Ifri’s Julienne additionally flagged a sequence of issues that make the EU-China relationship difficult, together with an more and more tough atmosphere for international firms working in China and Europe’s rising commerce deficit. Moreover, he stated Beijing was “weaponizing” commerce to place stress on Europe — like they did with the brandy tariffs.
China first began investigating European brandy imports after the EU started slapping levies on Chinese language-made electrical autos final yr, which pose steep competitors to Europe-made alternate options.
U.S. tariffs impacting EU-China relations
U.S. President Donald Trump’s latest tariff regime may have been a chance for China and the EU to enhance their relations, based on Ifri’s Julienne.
“It ought to have had a constructive influence on the bilateral relationship, within the sense that — dealing with financial coercion from the USA — [the EU and China] — might need been anticipated to barter and compromise with the intention to benefit from their commerce relationship amid the US tariff struggle,” he stated.
This has but to materialize.
Jean-Marc Fenet, senior fellow on the ESSEC Institute for Geopolitics & Enterprise, prompt one motive for this failure might be that Beijing feels it has come out on prime in its personal commerce drama with Washington.
“The necessity for a standard entrance with the EU is subsequently much less needed,” Fenet stated. “In reality, the worry now in Beijing is fairly that the EU will settle for an alignment with an anti-Chinese language line that the American administration would impose on the sidelines of the commerce negotiations.”
After preliminary sharp escalations and tense negotiations, China and the U.S. confirmed a commerce framework settlement in June, together with provisions round hotly contested uncommon earths and tech rules. Earlier this yr, Beijing had imposed export restrictions on a number of uncommon earth components and magnets, which are sometimes utilized in the automotive, protection and power sectors, as a part of its response to preliminary U.S. tariffs.
Mild on the finish of the tunnel?
The Mercator Institute’s Stec argued {that a} resolution is “unlikely to be discovered” on the lingering factors of commerce competition between Beijing and Brussels, as a substitute foreseeing additional points.
“The overcapacity and commerce diversion points paired with Beijing’s willingness to make use of uncommon earths export controls as leverage in EV tariffs negotiations sign extra turbulences to come back,” he stated.
Tensions over the EU’s measures to spice up its autonomy and China’s makes an attempt to stop these efforts will also be anticipated based on Stec.
Fenet struck a equally skeptical tone.
“The numerous hardening of the European Fee’s positions and the rise within the energy of the safety instruments it has outfitted itself with in recent times, make it seemingly that there can be rising frictions, as proven by the latest measures taken in opposition to Chinese language medical gear and as we are going to undoubtedly see on the EU-China Summit on July 24th in Beijing,” he added.
His hopes for the summit — which sources informed CNBC will embrace a gathering between European Fee President Ursula von der Leyen and Chinese language President Xi Jinping — are additionally low.
“The 2 events already appear to be anticipating a tough and possibly inconclusive assembly,” Fenet stated.
— CNBC’s Silvia Amaro contributed to this report.
