When Maroš Šefčovič presented his strategy for dealing with China to EU ambassadors in July, he issued a warning to governments pushing for stricter trade measures against Beijing.
“Sometimes it is even popular to start a trade war, but it is very difficult to end it,” the EU trade commissioner later recalled in an interview with POLITICO.
Three months later, Šefčovič has achieved a first breakthrough: last week, an agreement was reached in Beijing to drastically reduce imports of Chinese hybrid cars. This symbolic success is a small step toward stabilizing trade relations, which Brussels believes have reached a dangerous tipping point.
The agreement, which initially limits imports to 350,000 vehicles per year, represents a significant concession by Beijing, whose automakers have flooded the European market with increasingly competitive vehicles.
For Šefčovič, who negotiated a tariff truce with Donald Trump last year, the agreement suggests that his strategy of engagement, backed by the threat of tougher trade measures, is beginning to pay off.
Šefčovič had agreed to initiate a trade dialogue during a meeting with Chinese Trade Minister Wang Wentao in Brussels at the end of June.
The Slovak commissioner hoped that by focusing first on the automotive sector—an area where the EU holds leverage as one of the few major markets still open to Chinese manufacturers—he could achieve a trust-building success. Only later does he intend to turn to more difficult issues: from critical raw materials to China's massive industrial overcapacity.
At the same time, he worked to unite European governments behind an initiative to strengthen the EU's trade defense measures. Šefčovič bolstered his negotiating position with the threat of tougher measures to reduce the EU's trade deficit with China, which stands at one billion euros per day.
However, the hybrid deal is only the first step in a much larger competition.
EU heads of state and government are meeting in Brussels on Thursday to take stock. They must weigh whether to push through demands for more aggressive measures to protect European industry.
The meeting will show whether a commissioner who has built his career on finding compromises with difficult partners can maintain Europe's support for a strategy whose success is far from certain.
“You are dealing with the same partner at the negotiating table,” Šefčovič said in an August interview with POLITICO about the risks of a trade war. “So if you can avoid that, it would be much better.”
Market Power
Šefčovič's first step was to focus on an area where Europe still has influence: access to its market of 450 million people.
China's manufacturers have become global powerhouses but are struggling with weak domestic demand. A persistent slump in the real estate market is weighing on private consumption, while ruthless competition has triggered price wars. Domestic passenger car sales fell 28 percent year-on-year in September.
As a result, overseas markets are becoming increasingly important. With the US excluding Chinese imports, Europe remains one of the most lucrative markets still open to Chinese manufacturers.
Šefčovič bet that Beijing would prefer to accept export restrictions rather than risk losing access to the European market entirely.
He focused his attention on the automotive sector, where Chinese manufacturers have gained a foothold very quickly. In 2024, Chinese automakers had a share of just 2 percent in both the European hybrid and plug-in hybrid markets; by the first half of 2026, the respective shares had risen to 14 percent and 25 percent, according to industry figures.
The Commission was preparing to restrict the import of hybrid vehicles even without an agreement. However, a negotiated solution also offered Šefčovič political added value: proof that dialogue with Beijing can lead to tangible results.
The negotiations were intense, according to a person familiar with the talks on the Chinese side.
“It was very, very hard,” said the person, who wished to remain anonymous to speak openly about the closed-door negotiations. “Both sides had not experienced such intensity for a long time. No summer break, no holidays. They worked around the clock, even a day or two before Šefčovič's trip to Beijing.”
While Brussels sought dialogue, it simultaneously wanted to convince Beijing that it was prepared to take tougher measures should negotiations fail.
Šefčovič had previously announced plans for a new “diversification instrument” that would require companies in critical sectors to source essential inputs from at least three suppliers—a move to limit China's ability to exploit Europe's dependence on its critical raw materials.
Then, just three days before Šefčovič's trip to Beijing, France and Germany increased the pressure.
President Emmanuel Macron and Chancellor Friedrich Merz called for a powerful new trade weapon that would allow Brussels to restrict—or even completely block—access to the European market within days for countries accused of unfair competitive advantages.
Although the proposal did not explicitly name China, Beijing was the obvious target.
Maintaining Cohesion
According to several diplomats, EU leaders are expected to welcome the agreement but will simultaneously push the Commission to act quickly to strengthen the Union's trade defense measures. The agreement reached in Beijing has bought time, but has not yet clarified how far Brussels should go if Chinese exports continue to rise or negotiations stall.
“We are losing thousands of jobs in industry; olive oil and ice cream will not solve the core problem,” said an EU diplomat after Šefčovič briefed ambassadors on Sunday, referring to the reported outcomes of the talks.
A senior German official welcomed the Beijing agreement as a first step in the right direction. “It is a positive sign—which, of course, does not fully solve the problem of the trade deficit with China,” the official said.
But Berlin's support for a tougher line could prove short-lived.
Alicia García-Herrero, a senior fellow at the think tank Bruegel, argued that Beijing's concessions were designed to appease Berlin, given the importance of the automotive industry to the German economy.
“I just hope that Merz does not back away from the letter he sent to the Commission,” she said. With the German chancellor politically weakened at home, García-Herrero fears he might hesitate to risk a protracted confrontation: “I am worried that Merz will use this quick success and walk away.”
This leaves Šefčovič with a balancing act: he must keep EU governments on board with continued engagement with China while maintaining the credible threat of tougher measures should talks fail.
“I expect [the leaders] will give the Commission the green light to push ahead with further trade defense measures. China could see this as a betrayal. If that happens, we could very quickly find ourselves back in a conflict,” said Noah Barkin, a senior advisor on the China team at the Rhodium Group.
The Upcoming Fight
For Šefčovič, the challenge now is to turn a limited breakthrough on cars into a broader realignment of trade with China—while simultaneously buying Europe time to strengthen its defenses should negotiations fail.
“There is a strong case for doing to China what China has done to Europe for years—bogging Beijing down in dialogues and procedures while Europe prepares its instruments. But the EU must fully utilize the time these talks provide,” said Barkin of Rhodium.
The trade commissioner is expected to have a video call with Wang in January before the two meet again next March. These talks will show whether Beijing is willing to make further concessions in sectors where European industry is increasingly on the defensive, including the chemical industry.
Another priority is critical raw materials, where China has agreed to continue issuing export licenses for rare earths. Beijing's control over their supply gives the country significant leverage over European manufacturers, highlighting the limits of Šefčovič's negotiating position.
The Commission is also preparing two proposals for December: the diversification instrument, which aims to reduce dependence on Chinese supplies, and a mechanism to protect European industries and regions from retaliation.
The scale of the challenge is enormous: Chinese imports of hybrid cars amounted to 6.7 billion euros in the first half of 2026, while the trade deficit between the EU and China was 360 billion euros last year. While the agreement provides some relief to European automakers, it does little to address the underlying imbalance.
Brussels hopes that the protective measures for hybrid vehicles can serve as a blueprint for protecting other industries facing a surge in Chinese imports.
“We are listening to our industry. This includes the chemical industry, the wind power sector, and the furniture industry. We know where there is an increase, and we know what hits us hardest in terms of our deindustrialization,” a senior Commission official said on Monday.
Šefčovič acknowledged the limits of dialogue in his interview in August, warning that negotiations without tangible progress would become increasingly difficult to sustain.
“It would be very important to come back and say that the problem is recognized and there are already some pilot projects we want to test to see if they work,” he said.
“But if simply nothing happens, then of course it will be much more difficult for us to just talk about these topics.”
