EU and Beijing heading for trade war as Brussels slams ‘unsustainable’ $1billion-a-day deficit – but China warns: ‘Trade war? Let them try
EU and China are moving closer to a trade dispute as European Trade Commissioner Maroš Šefčovič began two days of talks in Beijing to address what he called an “unsustainable” trade deficit. The talks matter because both sides are considering measures that could restrict trade, while European industries rely on some Chinese supplies and China depends heavily on exports.
European figures put China’s surplus in trade with the EU at about €1 billion a day last year. France and Germany have urged the EU to prepare a rapid response to possible Chinese action, including easier use of its Anti-Coercion Instrument, though member states disagree on a tougher approach. Beijing has warned against protectionist measures, while saying it favours resolving differences through dialogue.
- EU officials say the trade deficit with China is unsustainable.
- China’s surplus was about €1 billion a day last year.
- EU countries differ over how strongly to respond.
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The European Union and China have a major trading relationship, but tensions are mounting over what the EU describes as an unsustainable imbalance favouring China. European figures calculate that China enjoys a trade surplus of roughly €1 billion a day, meaning Chinese exporters sell substantially more to the EU than European exporters sell to China.
Both sides are now weighing up measures that could restrict trade between them. The EU is exploring ways to respond to the imbalance, whilst China has warned against protectionist steps, though it says it prefers to resolve differences through dialogue. High-level talks between the two sides are currently taking place to address the issue.
This matters because both economies are heavily interdependent. European manufacturers rely on Chinese supplies and materials, whilst China depends substantially on selling goods to European consumers. Any restrictions on trade could harm businesses and consumers on both sides, which is why European countries remain divided over how aggressively to respond.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The EU faces a substantial and unsustainable trade deficit with China of approximately €1 billion daily, reflecting systemic imbalances in market access and competitive conditions. European policymakers legitimately view protective measures as necessary to preserve industrial capacity, ensure economic security, and negotiate more equitable terms; without assertive action, European firms risk becoming uncompetitively disadvantaged whilst supply chains become dangerously dependent on a single source.
The case against
Trade restrictions risk damaging mutually beneficial economic ties and triggering a harmful escalatory cycle that ultimately hurts consumers and businesses on both sides. China's emphasis on dialogue over coercive measures reflects the view that open trade serves both economies better than protectionist approaches, and that substantial trade deficits reflect natural market dynamics and comparative advantage rather than inherent unfairness warranting restriction.