European Union and Chinese language flags are displayed aspect by aspect within the assembly room the place Chinese language International 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 world 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 more likely to be impacted by competing imports.
In latest weeks, EU restrictions on Chinese language firms collaborating in public tenders for medical gadgets 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,” in response to Marc Julienne, director of the Heart of Asian Research on the French Institute of Worldwide Relations (Ifri).
“What was as soon as a website of nice alternative and enthusiasm for the bilateral relationship has now grow to be extra about dangers than alternatives,” he instructed 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, advised.
“The EU and China are broadly on a colliding trajectory by way of their commerce and industrial coverage issues,” he instructed CNBC. Bones of rivalry embody 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 have to export contradicts the EU’s want to guard its personal industrial base,” he added.
China’s economic system is going through a spot between its manufacturing capability and demand. Additionally it is fighting sluggish development, whereas exports, which lengthy boosted the economic system, have been underneath stress amid world commerce tensions and decrease demand.
Ifri’s Julienne additionally flagged a sequence of issues that make the EU-China relationship tough, 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 12 months, which pose steep competitors to Europe-made 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, in response to Ifri’s Julienne.
“It ought to have had a optimistic affect on the bilateral relationship, within the sense that — going through financial coercion from america — [the EU and China] — might need been anticipated to barter and compromise with a purpose to benefit from their commerce relationship amid the US tariff battle,” he stated.
This has but to materialize.
Jean-Marc Fenet, senior fellow on the ESSEC Institute for Geopolitics & Enterprise, advised one cause for this failure could possibly 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 due to this fact much less vital,” Fenet stated. “In truth, the concern now in Beijing is relatively 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 12 months, 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 rivalry 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 return,” he stated.
Tensions over the EU’s measures to spice up its autonomy and China’s makes an attempt to forestall these efforts will also be anticipated in response to 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 geared up itself with in recent times, make it probably that there can be rising frictions, as proven by the latest measures taken in opposition to Chinese language medical tools 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 instructed CNBC will embody 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.
