The European Union is preparing for a tougher phase in its trade relationship with China, as a surge in Chinese exports pushes the bloc's trade deficit towards a record and a preliminary deal on cars leaves wider imbalances untouched.
EU and Chinese trade envoys agreed what they described as a broad initial deal on 10 October after two days of talks in Beijing. The EU trade commissioner, Maroš Šefčovič, said it could cut imports of Chinese electric and plug-in hybrid cars by up to half. In return, China would lower tariffs on some European goods, including car parts, olive oil and footwear, worth almost €4bn, and ease export licensing for rare earths and permanent magnets. The agreement still needs the backing of EU leaders.
Hybrids in the spotlight
Hybrids have become the focus because they escaped the countervailing duties of 7.8 to 35.3 per cent that the EU imposed on Chinese battery electric vehicles in 2024, and face only the standard 10 per cent tariff. According to Eurostat data, imports of Chinese plug-in hybrids rose from 56,706 units in 2022 to 217,764 in the first seven months of 2026; imports of conventional hybrids rose from 659 to 160,662.
Beyond cars
Officials describe the EU's deficit with China, at roughly €1bn a day, as unsustainable. Chinese exports to the EU rose 16 per cent in the first nine months of the year, and Bloomberg reported on 23 October that Brussels is considering curbs beyond the car sector for the next round of talks.
Beijing says the relationship is "mutually beneficial in nature, not a zero-sum competition" and has urged the EU to follow WTO rules. The two sides plan to meet by video in January and in person in March.
