Brussels, Beijing. The European Union (EU) wants to negotiate a deal with China by Friday to prevent an escalation in the trade conflict. Trade Commissioner Maros Sefcovic flew to Beijing on Wednesday with European negotiators.
On Thursday and Friday he would like to negotiate a temporary standstill agreement with China's Trade Minister Wang Wentao. If the Chinese side does not come to an agreement with the EU, Sefcovic wants to hit back hard.
According to information from Handelsblatt, EU negotiators are pushing for Beijing to limit its exports of electric and hybrid cars to the EU. “The deal would at least temporarily dampen the increase in Chinese car exports,” said Bernd Lange (SPD), chairman of the trade committee in the European Parliament, to Handelsblatt. “It’s about flattening the import curve and giving the European automotive industry time to do its homework.”
Sefcovic spoke to EU ambassadors about a “proof of concept”, a pilot test that would show whether further negotiations with China were worthwhile.
Next week, the EU heads of government want to discuss how to proceed with China at their summit in Brussels. If the People's Republic does not agree to a deal, the EU will introduce further protective tariffs against Chinese goods, say EU officials and diplomats.
Brussels is based on a model that Europe used four decades ago to cushion the rapid rise of the Japanese auto industry. At that time, the Europeans and Japan agreed to limit Japanese car exports. At the same time, Japanese manufacturers expanded their production in Europe.
Nissan, Toyota and Honda opened their own factories in Europe in the late 1980s and early 1990s and produced cars there for the European market instead of importing more and more finished vehicles.
The EU is now also counting on this with China. Exports should be slowed down, and at the same time Chinese manufacturers should build a larger proportion of their cars and battery cells in Europe. BYD plans to start production at its new plant in Szeged, Hungary, this year. Chery plans to manufacture in Barcelona. The Chinese battery manufacturer CATL is currently ramping up a factory in Debrecen, Hungary, and is building another factory in Zaragoza, Spain, together with Stellantis.
Sefcovic's negotiators are aware that limiting car exports alone will not solve the problem of the massive increase in Chinese exports. However, it would be a face-saving way out for the Commission to avoid a trade war, for which Europe is currently ill-equipped. Even the USA was forced to give in in the conflict with China when Beijing limited the export of rare earths, diplomats and officials point out.
“Unlike the US, which first came with the tariff club and then had to negotiate, Europe wants to negotiate first and achieve results without escalation,” said a senior EU diplomat.
Jian Junbo, director of the Center for Sino-European Relations at Shanghai Fudan University, expressed hope in Handelsblatt that the meeting between Sefcovic and Wang would lay a solid foundation for a "trade and investment coordination mechanism" and help prevent a more violent trade conflict.
The EU has prepared a “soft and hard” response, he said. However, if the negotiations do not go smoothly and the EU takes tougher measures, “China would react unequivocally and harshly.” Jian was convinced that a compromise is possible “since both sides have an interest in avoiding an escalation of the conflict.”
The German Chamber of Foreign Trade is also relying on a negotiated solution. “A negotiated trade agreement, for example in the form of agreed export caps, is clearly preferable to further trade policy escalation,” said DIHK foreign trade chief Volker Treier.
The pressure on Brussels is growing. All 27 EU member states now have a trade deficit with China, which totals more than one billion euros per day. In the first half of this year, the imbalance widened again by nine percent.
The EU has been levying additional countervailing duties on battery-electric cars produced in China since October 2024. Nevertheless, exports continue to rise rapidly. Plug-in hybrids are also exempt from European countervailing duties. The Commission now wants to close this gap. Beijing should voluntarily limit its electric and hybrid car exports, otherwise the EU will have to impose additional tariffs.
It's no longer just about electric cars. The Commission official responsible for enforcing European trade policy, Denis Redonnet, warned last week of sharp and sustained increases in imports from China of machinery, chemicals, textiles and base metals.
At the same time, the market is disappearing, particularly for German companies that have been doing profitable business in China for a long time. In the first half of 2026, German exports to China fell by more than twelve percent to less than 37 billion euros. At the same time, imports from China rose by almost nine percent to almost 92 billion euros.
An agreement on export limits for vehicles could therefore only be the beginning, say EU diplomats. German mechanical engineering companies are also calling on the EU to implement concrete concessions for their industry. “China must be persuaded through negotiations to end the unfair trade measures it has been practicing for years, such as high subsidies and an artificially low currency,” says VDMA General Manager Thilo Brodtmann.
As Handelsblatt exclusively reported in June, the EU Commission has prepared investigations into Chinese plug-in hybrids, chemicals and machines. If the negotiations fail, the EU wants to quickly impose countervailing duties and import quotas.
Sefcovic himself warned in September that the political pressure for other solutions would increase massively if the talks with China did not produce results.
In parallel to the negotiations, the EU is preparing for an escalating trade conflict with China. As the Handelsblatt reported on Monday, Germany and France have called on the Commission to tighten European trade defense instruments.
A so-called “kill switch” is intended to authorize the Commission, in the event of a trade war, to quickly take far-reaching countermeasures up to and including exclusion from the EU internal market. The instrument is intended to deter China from escalation.
