EU and China set October deadline to resolve trade imbalances

The European Union and China have agreed to launch a new ministerial-level trade dialogue platform, with an October deadline for "tangible results" on disputes over trade imbalances, export controls, and intellectual property. The EU's goods deficit with China reached €360 billion in 2025, equivalent to €1 billion per day, and expanded further in early 2026. Source: AP News, CNBC

What happened

EU Trade Commissioner Maroš Šefčovič and Chinese Commerce Minister Wang Wentao met in Brussels on Monday, producing a rare joint statement. They agreed on four initial workstreams: trade and investment balancing, export controls, intellectual property rights, and WTO reform. Beijing also accepted a "joint monitoring mechanism of trade flows" using agreed data to flag import surges. Šefčovič warned that without meaningful progress, the bloc would be forced to take action. Source: SCMP, Ground News

The stakes

• The deficit is driven by Chinese exports of electrical equipment, solar panels, EVs, and even air conditioners, as Europe faces a record heat wave. Source: CNBC
• European industries face a "China shock 2.0," with Volkswagen reportedly planning up to 100,000 job cuts and BMW cutting 5% of its workforce. Source: Al Jazeera
• The EU has imposed tariffs of up to 35.3% on Chinese EVs, but Chinese brands still surpassed 10% of EU auto sales in May. Source: Al Jazeera

Broader tensions

The EU is also squeezed between the US and China. A new report warns that Europe's chip sector faces risks from both Chinese export controls and US dependence, especially under the second Trump administration. Meanwhile, new EU steel quotas halve duty-free imports from non-treaty countries but give better terms to 12 FTA partners including the UK. The UK car industry also fears exclusion from the EU's Industrial Accelerator Act, which Acea says would be a "spectacular own goal."