Europe's economy under pressure: EU threatens record trade deficit with China

Dublin. The EU is threatened with a new record deficit in goods trade with China. As Trade Commissioner Maros Sefcovic said after an EU ministerial meeting in Dublin, if current developments continue, there could be a bigger deficit at the end of the current year than four years ago.

“Our trade deficit with China reached almost 197 billion euros in the first half of this year,” Sefcovic said. “If this development continues, we could exceed the previous record from 2022 of 397 billion euros.”

In order to achieve more balanced trade relations, according to Sefcovic, the EU Commission will respond to requests from heads of state and government in the coming weeks and develop new instruments to combat imbalances. At the same time, existing EU instruments should be used and the dialogue should be continued.

The EU sees China's recent acceptance of a reduction in Chinese exports of hybrid cars to Europe as a first step in the right direction. According to Sefcovic, the aim is for China's deliveries to fall to less than half of the previously expected volume in the next four years.

From the EU's perspective, the large trade deficit is unsustainable primarily because, according to analyzes by economic experts, it can also be attributed to excessive and widespread subsidies, currency manipulation and the competitive disadvantages of domestic companies in China. If cheap imports from China increasingly displace domestic production, jobs and entire industries could come under pressure.

At the ministerial meeting organized by the Irish EU Council Presidency, Sefcovic described the latest developments in trade relations with the USA in a much more positive way. He shared the ministers' assessment that relations and trade had largely stabilized and that the trade deal agreed in Turnberry last year was working.

"In 2025, EU exports to the USA rose by 3.5 percent to 555 billion euros. In recent months they were also above the monthly average for 2024," explained Sefcovic. The EU is implementing the joint declaration of the EU and the USA - particularly with regard to tariff reductions, energy purchases and investments. In some cases this even goes beyond the agreed targets.