AI Brief
- EU ministers advocate expanding the hybrid vehicle import deal with China to other sectors amid concerns over rising Chinese exports impacting European industries.
- The EU has imposed anti-dumping and anti-subsidy tariffs, with 22 of 25 current investigations targeting China, and is considering broader safeguard measures.
- Future proposals include a rapid-response 'kill switch', a diversification instrument, and a solidarity package to support sectors affected by external trade actions.
BRUSSELS: European Union ministers said on Friday the bloc should press ahead with its discussions with Beijing and expand a deal struck to limit imports of hybrid vehicles from China to other sectors.
The ministers stressed the importance of dialogue, although the EU has other options to deal with a surge in Chinese exports, dubbed China Shock 2.0, which industry groups say are causing factory closures and job losses.
DISCUSSIONS
European Trade Commissioner Maros Sefcovic struck an agreement with Beijing earlier this month for the EU to cut imports of hybrid vehicles from China by more than half.
The EU trade chief acknowledged that this was merely a first step in the bloc's efforts to rebalance its trade relations with China. The EU's goods trade deficit swelled to more than €370 billion (US$414.25 billion) in 2025 and is on course to break well past €400 billion this year.
China has also agreed to cut import tariffs on €4 billion of EU exports, including car parts and olive oil, and to ease the issuing of export licences for rare earths.
Sefcovic and Chinese Commerce Minister Wang Wentao have agreed to meet again in March, when further steps could be unveiled.
EXISTING MEASURES
The European Union has adopted a large number of anti-dumping and anti-subsidy measures, principally in the form of tariffs, against China. Of 25 new such EU investigations currently underway against all countries, 22 target China either alone or with other countries.
The investigations cover tyres, some steel products and a wide range of chemicals.
The EU's highest-profile recent case, against Chinese electric vehicles, resulted in additional tariffs of up 35.3% being imposed in 2024.
The European Commission is opening around 30 investigations a year into China, up from a historical average of about 12. Critics say that there is still a backlog of complaints and that the cases are very specific, meaning Chinese producers can easily shift to exports of similar products or goods one step up or down the value chain.
SAFEGUARDS
Another existing option is safeguards, which set import quotas, with tariffs typically applying for volumes beyond the quota limits. The EU has tended to shy away from them, feeling they are protectionist, and so far they have only been applied to steel products and ferro-alloys.
Through a safeguard, the EU can target a broader range of products. The hybrid vehicle agreement with Beijing will be put in place as a safeguard, covering plug-in and non-plug-in cars. Safeguards are also blunter instruments, with quotas set for all trading partners.
Safeguard requests can only be submitted by EU members. They also vote on final measures, which require support from a "qualified majority" of EU members — at least 15 representing 65% of the EU's population — a threshold that until recently was considered out of reach.
However, a new geopolitical climate, with US tariffs and a burgeoning trade deficit with China, has changed EU thinking as industries warn that surging imports are putting European jobs at risk.
Safeguard cases look to be pending for PET, the plastic often used in packaging, and chemical composites. Other chemicals and machinery cases are also possible.
FUTURE MEASURES
France and Germany proposed earlier in October a series of measures the EU could take against China, including a new rapid-action measure to strike back against countries that harm the bloc by limiting or cutting off their access to the EU's single market.
The European Commission has agreed to propose such a measure, which has been dubbed a 'kill switch', although it is not clear when.
It will propose in December a 'diversification instrument' that would seek to limit companies' reliance on single sources for certain critical supplies.
The EU executive will also put forward a 'solidarity package' to support EU members or sectors that are hit by trade measures from outside.
