2026 to intensify trade tensions between EU-China: Report

New Delhi: The European Union (EU), beyond tariffs and sanctions, set to continue on its trajectory of diversifying its trading relationships away from China and sharpening its trade defence armoury, developed with China in mind, but Beijing “doesn’t seem much to care”, according to a new report.

According to a report in Politico, the EU-China trade relations are “at a standstill”, as German Chancellor Friedrich Merz is likely making his first visit to China next month.

“The trade deficit is not going to improve anytime; China is not going to consume our products. All of that is wishful thinking,” Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis and a senior fellow at think tank Bruegel, was quoted as saying.

In December last year, Beijing announced “its latest counterpunch in a dispute over EU duties on Chinese-made electric vehicles imposed in 2024, setting punitive provisional duties on dairy products”.

It was also clearly unhappy with German auto giant Volkswagen’s bid to “wangle an exception to the EV duties”, according to the report.

America’s lurch into protectionism under President Donald Trump is displacing trade flows, making it even harder to resolve thorny issues such as market access and state subsidies. Chinese exports to Europe are on the rise again — and are more than double Europe’s exports to China, which are in decline.

French President Emmanuel Macron wrote in an op-ed for the Financial Times recently that “Either we rebalance economic relations co-operatively — engaging China, the U.S. and the EU in a genuine partnership — or Europe will have no choice but to adopt more protectionist measures”.

However, Chinese President Xi Jinping has yet to heed the calls to rebalance trade.

Experts warn that existing tensions may rise even further.

Francesca Ghiretti, director of the China Europe Initiative at the Rand think tank, was quoted as saying in the report that “2026 will intensify the dynamics and tensions already visible in 2025”.

IANS