European Union leaders have agreed to strengthen the bloc's trade defences against a surge of cheap Chinese exports, tasking the European Commission with developing new tools to protect European industry — while carefully avoiding any language that could be seen as a direct provocation toward Beijing. The decision came after a two-hour summit dinner in Brussels, where leaders of the 27-member bloc discussed what officials described as "global macroeconomic imbalances" — diplomatic language widely understood to refer to China, a country notably absent from the summit's official agenda and draft conclusions.

The scale of the imbalance is striking. The EU's trade deficit in goods with China reached around 360 billion euros last year — roughly one billion euros per day — as Chinese exports of solar panels, batteries, electric vehicles, steel, and chemicals flood European markets at prices that domestic producers cannot match. The OECD estimates that between 2005 and 2024, Chinese firms received three to eight times more state support than companies in wealthy industrialised nations, giving them a structural competitive advantage that Brussels considers fundamentally unfair.

Leaders asked the Commission to "develop and eventually complement the toolbox in the area of trade defence" and to ensure the EU has "all the instruments it needs to defend its interests and derisk." One option under discussion is a new sector-specific tariff instrument — modelled loosely on the United States' Section 301 trade tool — that French President Emmanuel Macron has championed, arguing European "sovereignty is at stake." Germany, whose export-heavy economy makes it particularly vulnerable to Chinese retaliation, has until now been cautious, but Berlin signalled it is open to new measures provided they are not explicitly targeted at a single country. Spain, meanwhile, struck a more conciliatory note, with Prime Minister Pedro Sánchez calling for pragmatism and bridge-building with China.

The fear of retaliation is well-founded. When the EU imposed higher tariffs on Chinese electric vehicles in 2024, Beijing responded with anti-dumping duties on European cognac. China has also shown its willingness to use its near-monopoly on critical rare earth minerals as political leverage, and last week abruptly cancelled two diplomatic meetings with EU officials — a move interpreted in Brussels as a warning signal. Belgian Prime Minister Bart De Wever has argued the EU must accept short-term pain to protect its industry in the long run, writing in a letter to Commission President Ursula von der Leyen: "The question is: are we willing to bear the pain? My answer is yes."

Despite hardening resolve among several member states — including France, Italy, the Netherlands, Lithuania, and Belgium — no concrete measures are expected immediately. The Commission must first propose specific tools, and the scope of its mandate depends on what leaders ultimately agree to. EU Trade Commissioner Maroš Šefčovič has invited China's Commerce Minister to Brussels later this month, a sign that the bloc still hopes to manage tensions through dialogue rather than confrontation. How that balance is struck will matter well beyond Europe: China's trade practices are also on the agenda of G7 talks this week, reflecting growing concern among Western nations about economic dependencies they have been slow to address.