EU Officials Fear Leaders Will Balk in Confronting China

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The EU’s problem isn’t a lack of tools, according to one senior official — it has the instruments that would hand it ample flexibility to act if there was the will to do so.

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One such solution is the so-called anti-coercion instrument, which allows the EU to target and adopt numerous tariff and non-tariff responses to coercive practices if member states back the approach. So far, the bloc has never used it.

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Another official said not enough member states are willing to absorb the pain that would follow any inevitable Chinese retaliation. Both officials pointed to how the EU negotiated with the US, when the bloc shied away from a robust approach before ultimately settling for a lopsided free-trade accord in which it accepted an American tariff on its goods while removing tariffs on US products.

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China retains a stranglehold on minerals and chips critical to key European industries such as defense and automobiles. This complicates the EU’s efforts to get tough on Beijing as the government in China is able to use export controls to bring European companies to their knees. And Beijing has already cautioned that it’ll fight any EU moves to protect its industries and expand its policy toolkit.

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In 2025, China showed some of the damage it can do with its export controls, when it imposed restrictions on rare-earth elements, causing global panic about shortages and manufacturing shutdowns.

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In a display of just how vulnerable the EU is to supply disruptions, European carmakers successfully lobbied the commission earlier this year to temporarily suspend sanctions on a major Chinese semiconductor supplier. Without an exemption, the companies warned that they’d run out of stock in a matter of weeks.

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To be sure, the EU will continue to sanction some Chinese firms aiding Russia and to adopt measures such as anti-subsidy related tariffs and other countervailing sectoral moves, said the people. But it’s unlikely that the EU will embrace the more radical action suggested by the commission that would be needed to try and rewire the trade relationship with Beijing, given the bloc’s hesitance to engage in a trade conflict.

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Following a meeting on Monday with Chinese Commerce Minister Wang Wentao, the EU’s trade chief, Maros Sefcovic, told reporters they had agreed to set up consultations and working groups to tackle trade disagreements on matters such as export controls and investments. They set an October deadline to make progress on those issues.

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“The gap is widening. China’s exports to the EU keep rising, while our market share in China keeps shrinking,” Sefcovic told reporters after the meeting. “This trend is not sustainable. The status quo is not an option.”

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At the same time, the commission is reviewing its current trade defense tools and exploring new ones, said Podestà, the commission spokesperson.

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The bloc is also looking at ways to diversify its supplies, similar to how it weaned itself off Russian energy, and how to support industries that may be hit hard by any disruption. 

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During a meeting with ambassadors from the bloc’s member states, Sefcovic expressed confidence that the fresh talks would lead to results, people briefed on his comments said. 

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The EU’s trade chief acknowledged that not all issues would be solved by the October deadline, but said he hoped there will be a clearer understanding on how to rebalance trade flows, some of the people said. Sefcovic is expected to travel to China in October, ahead of an EU leaders summit in Brussels where the issue will be on the agenda, the people said.

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The bloc’s trade chief didn’t explain how this renewed dialog differed from previous efforts. Nor did he disclose what tangible results he expected by the deadline – and what would be the consequences if they weren’t achieved.

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—With assistance from Ewa Krukowska and Jorge Valero.

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(Updates with additional information on EU-China trade talks starting in paragraph seven.)

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