EU-China trade deficit exceeds 400 billion euros: Macron proposes "European reciprocal tariffs" to counter China's low-priced dumping of goods

European trade deficit with China widens to €360.6 billion (about $414 billion) in 2025, up 15% annually, and expands another 10% in the first four months of 2026.
(Background: Macron criticizes Trump’s “Section 301” as a threat to Europe: The EU should not kneel, and will take a stand this week.)
(Additional context: No hope for US-EU tariff negotiations? EU: Ready with “hundreds of billions of euros” in retaliatory tariffs; if talks break down, will activate ACI tools.)

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• Macron: The EU needs its own Section 301
• Existing measures are insufficient, investigations delayed again and again
• Caught between the US and China: the EU’s double dilemma
• China moving up the value chain, making conflicts harder to resolve

Europe’s patience with China’s trade imbalance is nearing a breaking point. According to Eurostat, the EU’s trade deficit with China in goods reached €360.6 billion (about $414 billion) in 2025, a 15% increase from 2024. In the first four months of 2026, the deficit widened another 10%.

Behind these figures is China’s continuous influx of low-priced goods into European markets, impacting local manufacturing industries’ harsh reality. An EU diplomat told Reuters this week: “We live in a wolf’s world. We are no longer in the era of pink rainbows.”

Macron: The EU needs its own Section 301

Faced with worsening deficits, French President Macron recently clarified his call to action. He said, “We must take protective and defensive measures,” and called for the EU to activate a “European version of Section 301.”

Section 301 refers to a provision in the U.S. Trade Act of 1974, which authorizes the government to impose tariffs on unfair or discriminatory trade practices. After the U.S. Supreme Court overturned Trump’s global tariffs imposed under the International Emergency Economic Powers Act (IEEPA) last year, Trump explicitly stated that Section 301 would be the main tool to counter trade deficits.

According to the Financial Times, this call has received responses from several member states: Germany, Poland, the Netherlands, and Belgium have expressed support, hoping to grant the EU faster authority to impose tariffs on China. Meanwhile, France, Italy, the Netherlands, and Lithuania jointly requested the EU to explore new mechanisms to limit over-reliance on a single country, possibly including new tariffs or quota systems.

Existing measures are insufficient, investigations delayed again and again

The EU has not been entirely inactive. In 2024, it imposed tariffs on Chinese electric vehicles and launched anti-dumping and anti-subsidy investigations against Beijing.

However, investigation procedures are slow and ineffective. Even more challenging is that the EU’s main defense measures must be legally applicable globally, meaning that even if targeted at China, other trade partners with good relations with the EU could be affected, creating unnecessary diplomatic costs.

A senior EU diplomat told the FT: “Last November, we were discussing how unbearable China’s situation had become and that action was necessary. Now we’re sitting here again, talking about the same issues.” This reveals the deep-rooted dilemma in EU decision-making: consensus is hard to reach, and actions lag behind the evolving situation.

Caught between the US and China: the EU’s double dilemma

The EU’s current predicament closely resembles the pre-“Dawn of Liberation” shock of US tariffs—trade imbalance worsening, internal pressures mounting, yet fears of retaliation.

China’s countermeasures are numerous. During past US-China tariff conflicts, China responded with reciprocal tariffs and also used critical leverage such as restricting rare earth exports. Europe’s dependence on Chinese rare earths and critical minerals is similarly deep. If conflict erupts, the costs could be significant. That’s why the EU is currently choosing to stay on the sidelines, prioritizing dialogue and planning legislation to diversify supply chains and reduce reliance on a single source.

The problem is, progress is slow. EU Commission President von der Leyen publicly accused China of distorting trade and restricting market access last summer. She admitted that previous efforts to encourage companies to diversify supply chains had not been fast enough, and new regulations will now impose mandatory requirements.

China moving up the value chain, making conflicts harder to resolve

What worries European officials even more is the structural shift in China’s export composition. The stereotype of China as a low-cost, labor-intensive manufacturing hub is changing. Recently, Chinese companies have made significant advances into high-value industries—electric vehicles, semiconductors, industrial equipment, and even some cutting-edge manufacturing sectors—challenging Japanese and Korean high-end manufacturers and increasing pressure on them.

For years, the US, EU, and other major economies have urged Beijing to shift growth models from export-driven to domestic consumption expansion. Yet, China’s domestic demand remains sluggish, and companies often turn excess capacity overseas, undercutting local competitors with lower prices. Notably, OECD data shows that from 2005 to 2024, Chinese firms received government subsidies three to eight times higher than those of OECD member companies, fueling accusations of unfair competition.

Today, despite high US trade barriers and a ceasefire between the US and China, Chinese goods blocked at the US border are flooding into Europe and other markets. This reshaping of trade patterns leaves the EU caught in a difficult position—every step is heavy with weight and consequence.