European Trade Tensions Rise Ahead Of The July Summit In China
Strained relations between the European Union and China have put their upcoming summit in late July at risk. During their discussions in mid-June, EU delegates opted not to hold an economic meeting with Chinese officials to discuss trade. The Financial Times reported that a 'lack of progress on numerous trade disputes' was why the meeting was not held.
Then, during a meeting between EU and Chinese officials on July 2, China opted to dramatically increase tariffs on several EU products. Chinese Foreign Minister Wang Yi even hinted that China may cancel part of the upcoming two-day summit between EU and Chinese officials due to the growing and ongoing tensions between both parties.
As the trade disputes worsen, it is unclear how European and Chinese officials will proceed with the July 24-25 summit. But if European leaders want China's help in convincing Russia not to continue aggressive invasions past Ukrainian borders, diplomats must first quell trade disputes and smooth the flow of commerce.
The trade tensions between the EU and China emerged in October 2024, after the Europeans 'raised tariffs on Chinese electric vehicles to as high as 45.3%,' Newsweek reported, while the Chinese imposed duties on imported brandy from the EU.
Since then, the trade battle between the EU and China has increased. In April 2025, China announced that it would restrict exports of rare earth minerals to Europe. The statement was met with outrage from the EU. These minerals from China are vital as they are used in the production of electric vehicles, medical equipment, military hardware, and much more. Following the restriction on these rare earth minerals, many European companies were forced to shut down their production lines.
While the EU and China impose tariffs on a variety of goods, the United States also recently implemented duties on numerous countries around the world. This includes tariffs on the EU and China. For example, the U.S. has imposed a 10% baseline rate on EU tariffs, but rates for steel (50%) and cars (25%) are significantly higher. Meanwhile, U.S. duties on Chinese goods remain as high as 55%, Reuters reported. As a result, this has put a strain on trade relations between the U.S. and the EU, as well as the U.S. and China. The trade tensions have also led to higher production costs for defense contractors within the United States and Europe. Politico also reported that this could lead to 'crucial supply chain disruptions.'
Both the EU and China have been negotiating with the U.S. to reduce these rates. Rather than seeking reconciliation, however, the EU and China have further played into these disagreements. In June, the EU banned Chinese medical devices from many public procurement contracts. Additionally, senior EU officials accused the Chinese government of attempting to 'blackmail' Europe after it imposed restrictions on the export of rare earth minerals. In response, European Commission President Ursula von der Leyen called on the EU to stand together as the organization fights against China's economic policies.
This upset Chinese officials. In early July, China announced a ban on European medical device companies, which can no longer sell products to the Chinese government. Additionally, China imposed higher duties on European brandy. This resulted in European officials confronting their Chinese counterparts. The European Parliament has also recently condemned China for the restrictions on rare earth minerals.
Despite this tension, the July summit may still proceed. In a recent statement made by the Chinese Foreign Ministry, the announcement read that China was committed to 'deepening [its] dialogue and cooperation' with the Europeans. Continued discussions could result in the easing of tariffs, and improve trade relations between the EU and China. This would grant the EU access to China's rare earth minerals, some of which are used for European military hardware.
In preparing for the July summit, the European Council held a meeting on June 26-27. One of the significant discussion topics during the two-day event was the current 'geoeconomic challenges' for the EU, namely wars raging in Ukraine and the Middle East. The EU has served as an intermediary in both conflicts, but negotiation attempts have not ended either war. Adding China as an intermediary during negotiations, however, might sway the outcome of current and ongoing diplomatic discussions. China has economic interests in both Eastern Europe and the Middle East. If China serves as a balanced mediator during diplomatic discussions in both conflicts, this could bolster China's trade relationships with the countries in both regions.
Lastly, EU representatives met with their Chinese counterparts for the 13th Strategic Dialogue in Brussels on July 2. During the discussion, delegates addressed EU-China relations and current trade issues between both parties. They stressed the need for 'fairer economic and trade cooperation.' They also concluded that it was 'important to find concrete solutions to rebalance the economic relationship,' according to a Chinese government press release. How this will be addressed, however, is unclear.
No one is certain if and how the trade dispute between the EU and China will be resolved. But officials from both entities will work tirelessly to address their trade disputes during the July 24-25 summit.
For both parties, it will be essential to move past these issues. For example, the European Commission's trade profile on China states that in 2024, 'EU imports of manufactured goods accounted for 97% of total imports from China.' Similarly, the profile noted that 'EU exports of manufactured goods consisted of 88% of total exports to China.'
In other words, the EU and China have a significant trade relationship. Resolving their trade differences will ease burdens on supply chains and global trade, and easing tariffs will make things more affordable for EU and Chinese consumers. It would also reduce the burden on defense manufacturers and contractors, as well as their production lines. Otherwise, if the trade disputes between the EU and China continue, this will bring further burdens on the economy of EU member states as well as China, thus harming global stability.
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