The European Commission has signaled a major shift, declaring the trade relationship with China 'not sustainable.' In a strategic debate, the bloc outlined a tougher approach driven by a record €359.9 billion trade deficit.
The focus is on de-risking, not decoupling, but tensions are escalating. The EU is imposing new duties on Chinese EVs and steel, and fines on firms like Temu. A new 'Industrial Accelerator Act' could restrict key sectors.
Beijing has threatened retaliation, already blocking rare earth exports vital for European tech and defense. The risk of a full-scale trade war is real, exposing deep divisions within Europe. Germany, tied to Chinese markets, is hesitating while France and others push for action.