Chinese commercial influx: Europe is turning assertive

A shorter version of this article originally appeared in English under the title “China's trade surge: October turns red,” published on October 5, 2026, on What’s up EU.

After years of a worsening trade deficit, expected to exceed €400 billion in 2026 compared to €164 billion in 2019, European leaders have set a deadline for Beijing: reach a cooperative solution by October, failing which the EU could resort to trade barriers of unprecedented magnitude. Measures taken in recent months, combined with the recent shift in Germany’s position, make such a course correction both credible and likely.

By the end of the year, the full package of EU measures could affect nearly 35% of Chinese imports through specific trade barriers, compared to 5% in 2019 and around 15% in 2024 (the Rhodium study covers only trade defense instruments, the primary vector for barriers prior to 2021). This estimate is also higher than that of Goldman Sachs, which values this share at 27%, but whose calculation takes into account only a portion of the measures under consideration and discussed below.

Faced with a Chinese leadership well-versed in the art of promises and threats, the uncertainty lies not so much in the erection of new barriers, which is inevitable, but in the exact scale of the shift and resulting level of trade tensions. Just over a year after striking a one-sided trade deal with the Trump administration at Turnberry in Scotland, Europe’s credibility in defending its economic interests is at stake.

Never has Europe appeared so close to a large-scale, coordinated strategic response in defense of its economic interests against foreign predation. In the brutal world that has emerged in recent years, this is a condition for preserving our prosperity and our freedom.

Europe is Taking the Full Brunt of the Second China Shock

Indeed, the world has been observing a new wave of Chinese exports since 2020, following those of the 1990s and 2000s. China accounted for 18.5% of global manufactured exports in 2019; its share is approaching 21% in the first half of 2026. This increase is equivalent to France's entire share in the field. It brings China’s footprint in global manufacturing exports to nearly three times that of Germany, the world's second largest exporter of such goods, compared to a ratio below two as recently as 2019.

For Europe, the challenge is all the greater because this second China shock targets its traditional industrial stronghold: chemicals, machinery, green industries, and automobiles. China’s rise in both power and manufacturing quality is a challenge as much in the single market as it is in China itself and in third markets across the globe. The notable exception of the United States - partially closed to Chinese goods - has allowed for a modest bright spot for European exports. However, it has above all amplified the pressure Chinese exports exert on other markets, chief among them the single market, the world's other high-end market.

Yet this is only half the problem. Chinese imports have simultaneously been significantly less dynamic across the board, particularly for European exports, amplifying the largest global trade surplus in modern history of which the surplus with Europe alone accounts for a third.

Testament to the undeniable success of China’s techno-industrialist pivot under President Xi, these exports have also been massively fueled by subsidies unmatched anywhere in the world. Recent IMF estimates point towards 4.4% of GDP per year, resulting in damaging effects on competitors in advanced economies, and a currency undervalued by 20. This "production-at-all-costs" model compresses domestic demand in favor of industrial investment, thereby generating endemic overcapacities and surplus. There is no current indication of a reversal of these trends.

Europe cannot, therefore, stand by idly in the face of distorted competition that threatens entire swathes of its economies. Beyond strictly economic considerations, the formal de-risking ambitions pursued by the EU since 2023 have amounted to little in the face of countervailing influx. Our dependencies on an actor accustomed to coercion - and the primary supporter of the Russian war effort in Ukraine - have thus continued to grow.

A Salvo of Heterogeneous European Measures in the Pipeline

In 2026, the EU resumed the ramping up of defensive measures initiated in 2024 with roughly thirty investigations. In 2025, Europe was consumed by tensions with the Trump administration, albeit still opening fifteen investigations into Chinese products (compared to a yearly average of nine over the preceding decade). This time, the measures vary greatly in nature, with some involving more structural shifts.

In the strictly trade-related sphere, the EU imposed additional tariffs this year on a dozen types of Chinese goods across chemicals, steel, tires, and agriculture. Around ten investigations were also launched in these sectors. New measures are almost certain by the end of October in chemicals, hybrid vehicles, and machine tools.

During the same period, the Union implemented extraordinary measures against small parcels, introducing a 3% customs duty per item category since July. The classification of these parcels as "small" should not obscure their significance - representing roughly €50 billion in imports for the EU in 2025 (or 7% of our total imports from China) - and has impacts far beyond competition alone. These efforts are set to be further strengthened by the end of the year through a €2 "handling fee" customs charge per parcel, even as the flow has already dropped by 40%.

In the steel sector, globally destabilized by Chinese overcapacities, the EU took measures unprecedented in both their form and stringency, cutting the Chinese quota by two-thirds over the summer. These measures were accompanied by an anti-circumvention mechanism targeting practices commonly associated with Chinese producers, as well as coverage extending to certain downstream sectors.

European trade measures against Chinese competition are this time going beyond traditional trade defense tools. Competition law targeting foreign subsidies has enabled the Commission to trigger investigations into several Chinese players - regarding the acquisition of a German electronic retail chain, the participation in public procurement tenders by China’s primary rolling stock manufacturer, or the activities of wind turbine and scanner suppliers. These initiatives can now result in the outright exclusion of offending companies from European public procurement, or even, in certain extreme cases, from the single market as a whole.

On another, more structural level, tensions are also feeding into the desire among Europeans to better protect domestic production from foreign competition. Thus, the multiple legislative proposals under negotiation to introduce a European preference in public procurement and EU subsidies are also implicit responses to Chinese competition. From the Industrial Accelerator Act (IAA) to the Cloud and AI Development Act, as well as the Multiannual Financial Framework (MFF), Chinese commercial and diplomatic pressures are driving a hardening up of positions in Brussels.

Furthermore, the undergoing strengthening of environmental standards in the European market would also de facto impede the entry of Chinese products into Europe. This applies to products at risk of causing deforestation, the accounting of carbon emissions under the Carbon Border Adjustment Mechanism (CBAM), or textiles under the 2023 Ecodesign Regulation, where China represents a large share of the inflow of products covered. The same holds true for the new regulation combatting forced labor, which is expected to fully enter into effect by the end of the next year.

Measures currently being designed against dependencies and vulnerabilities should also in practice disproportionately hit Chinese goods; primarily in critical minerals, new information technologies or green industries. This will take the form of excluding Chinese actors deemed unreliable or incentives to diversify excessively concentrated supply sources.

Finally, major investigations for non-compliance with European digital regulations against large Chinese e-commerce players have multiplied. Though less publicized than those targeting their American counterparts, investigations into Temu, Shein and AliExpress have already resulted in some €2 billion in fines since the beginning of 2025.

Threats, negotiations and a deadline

True to its culture of retaliation - as French brandy or Spanish ham producers can attest - Beijing has threatened retaliatory action against all the European measures mentioned so far, and has provided a glimpse of what is to come. For example, Chinese companies have been barred from cooperating with EU investigations into foreign subsidies, under threat of tougher measures. In late August, Chinese courts placed €1 billion of Chinese assets belonging to the Dutch semiconductor firm Nexperia under seal, against a backdrop of a sudden breakdown in relations with its Chinese owner and partner Wingtech, due to technology theft and geopolitical tensions. Furthermore, since 2024, a Chinese investigation concluded that there was undue discrimination against Chinese actors in Europe under the Foreign Subsidies Regulation (FSR). While no measures have been taken as a result as of yet, the investigation provides Beijing with a broad spectrum of rapidly deployable retaliatory options.

For the time being, following a decision by European leaders in favor of seeking a cooperative solution, the EU and the People’s Republic of China launched a dedicated negotiation framework in late June. The four working groups established on trade and investment, export controls, intellectual property, and WTO reform have until mid-October to produce initial results. According to European authorities, voluntary export restraints have been discussed.

European officials themselves have on their agenda a decision to make on the future direction of trade relations with China during the 15-16 October European Council meeting. The Commission is expected to have presented the initial results of these negotiations by then, for European leaders then to give the final green light for a portion of the new barriers being considered. Besides, the Commission is also expected to gather guidance there for diversification tools and measures to counter retaliatory actions - which will be formally proposed by the end of the year - as well as for ongoing negotiations on European preferences.

Unprecedented European convergence means a few rocky months ahead

Regardless of the outcome of the bilateral negotiations, EU action is inevitable. Europe’s head of trade defense, Denis Redonnet, is clear: "Dialogue alone will not suffice." During her annual State of the Union address in September, Commission President Ursula von der Leyen promised to "mobilize all instruments at her disposal to rebalance the relationship" against the "second China shock." Indeed, this time it looks different. 

Member States previously more hesitant about a confrontation with China have since revised their positions in the face of the massive influx of products. Germany - now on the front line against this second China shock and finally under pressure from its industry, including its automotive sector - is no longer standing in the way. Berlin made known in late August its support for firm action, in line with the direction set out in its economic reform plan published in early July. Even a French-German joint position communication on trade defense measures was announced, while a broader package to respond to this Chinese trade challenge is set to be approved by the Chancellery in mid-October.

The Netherlands and Belgium, historically somewhat reluctant to erecting new barriers, are too pushing for measures. The remaining resistance is found in Slovakia and Spain’s positions, both anxious to preserve a privileged relationship with Beijing; though Prime Minister Sánchez recently expressed convergence with France on the matter.

Given this relative intra-EU consensus, the uncertainty is now on the magnitude of the coming tensions: the ball is in Beijing's court. What concessions will be made regarding Brussels' grievances? What level of retaliation will follow the new European barriers? 

While the stabilization on the US-China trade front was freshly confirmed during Xi Jinping's visit to the United States, it is a safe bet to assume that Chinese authorities will want to put Brussel’s newfound determination to the test. Europe must then not lose sight of the fact that China, with its fragile domestic demand, cannot afford to lose its primary export market, all the more so for its high-end goods essential to its techno-industrial ambitions.

The significant interdependencies that exist between the world's two largest exporters preclude any possibility of divorce. Nevertheless, both worsening trade imbalances and Beijing's industrial ambitions render the status quo unacceptable. Together, they offer Europeans a unique opportunity to finally prove their capacity to collectively mobilize the single market in a tough trial of strength to the benefit of their strategic interests. It is about time.