The European Union (EU) has been running a massive trade deficit with China year after year. While the total volume of bilateral trade has reached $800 billion, the EU’s trade deficit with China has exceeded $350 billion.[i] This situation is causing growing concern in Europe. As exports of Chinese electric vehicles, lithium-ion batteries, and other high-tech products rapidly increase, the EU is developing initiatives such as “Made in Europe” to protect its own manufacturers and market share.
The fact that Chinese automotive companies offer vehicles that are cheaper and better equipped than European brands, and are rapidly dominating the market, is causing European manufacturers to lose their competitive edge. Additionally, Chinese automotive brands are accelerating their strategies to shift production bases to Europe to avoid EU tariffs and increase their market share. The EU, meanwhile, is seeking to introduce new subsidies targeting Chinese companies to protect its domestic market and address this massive trade imbalance.[ii]
One of the key topics at the G7 Summit, currently being hosted by France from June 15–17, 2026, is whether Europe will adopt tougher economic protectionist measures against China. Germany, whose automotive industry is deeply dependent on the Chinese market, has long avoided engaging in a direct tariff war with Beijing. In contrast, French President Emmanuel Macron is pursuing a strategy that is more balanced yet does not lose sight of the need for dialogue. Indeed, just before the G7 leaders’ summit, on June 11, a video conference chaired by Macron and attended by Chinese representatives—titled the “World Convergence for Growth Summit” —aimed to resolve macroeconomic imbalances without triggering a global governance crisis. Macron argues that structural distortions in global trade must be resolved through a coordinated and negotiation-based diplomatic channel with China, and he is using the G7 platform as a lever to convince his European allies of this “controlled balance” strategy.
However, it is quite difficult to reach a uniform consensus within the EU on how to curb China’s economic dominance. The comprehensive investigations launched by Brussels into Chinese electric vehicle subsidies and Beijing’s retaliatory investigations into European agricultural and food products keep the risk of trade wars alive. Despite this tense atmosphere, Paris and Berlin have chosen to go beyond the EU’s institutional rigidity and keep bilateral diplomatic channels with China open. In this vein, Macron’s December 2025 visit to Beijing marked a turning point where trade imbalances were directly addressed at the level of heads of state. During these talks, 12 agreements were signed, primarily covering sectors such as aviation, space, nuclear energy, green technologies, and artificial intelligence. This served as a concrete demonstration of France’s approach to its China policy: “mitigating risks” while “not severing ties.” While Paris seeks to protect European industry from unfair competition, it is also working to keep China at the table regarding the global climate crisis, AI governance, and macroeconomic stability.
The European Commission has pledged to take action to address the trade deficit with China, which has become unsustainable. The trade imbalance with China is also expected to be a key item on the agenda of the EU leaders’ meeting in Brussels, to be held immediately after the G7 summit.[iii] On the other hand, given the ongoing transatlantic trade tensions, it seems unlikely that Europe and the US will coordinate their policies toward China. Despite differences between France and China, they are maintaining contact and working to find a common solution. In this context, France has no desire to follow the US policy on trade with China. Both France and the EU are seeking to develop their own unique and pragmatic strategies toward China, independent of Washington. This is because China’s rise is viewed as a source of concern for the US, which does not wish to lose its superpower status. On the other hand, since Europe and France remain outside this hegemonic competition, they must develop a softer model of economic cooperation and alignment with China.
Over the past few years, the US has been exerting intense diplomatic pressure within Western multilateral institutions it leads—such as NATO and the G7—to officially designate China as a “systemic rival” or “direct threat.” The US’s pressure on European countries in this regard is clear. For example, in the United Kingdom—one of the strongest pillars of the Transatlantic alliance—how to characterize China (as a systemic rival or the number one threat) has been a subject of debate for many years.[iv]
At this stage, while the UK government still characterizes China as a long-term challenge and threat, it argues that commercial cooperation must be developed in parallel in line with the country’s economic interests.[v] A similar approach is evident in the stance of Europe’s two leading powers, Germany and France, toward China. In this context, Continental Europe has realized that, rather than escalating trade imbalances and security concerns with China through harsh sanctions as Washington has done, pursuing reconciliation and sustainable dialogue with Beijing is vital for long-term stability.
As a result, Berlin and Paris are concerned about China’s unfair trade practices and the asymmetric dependency they create. However, while both capitals remain committed to the transatlantic alliance, they know that completely losing such a massive market as China’s would be devastating for the European economy. This situation is steering Europe toward rational compromise and institutionalized dialogue mechanisms rather than escalating tensions with China.
[i] “Çin-Avrupa ticaret savaşı yaklaşıyor: AB kendini nasıl savunacak?”, Euro News, https://tr.euronews.com/my-europe/2026/05/18/cin-avrupa-ticaret-savasi-yaklasiyor-ab-kendini-nasil-savunacak, (Access Date: June 15, 2026).
[ii] Ibid.
[iii] “Macron wants the G7 to tackle China. Beijing isn’t playing along”, Politico, https://www.politico.eu/article/emmanuel-macron-wants-the-g7-to-tackle-china-beijing-isnt-playing-along/, (Access Date: June 15, 2026).
[iv] “UK to designate China a ‘threat’ in hawkish foreign policy shift”, The Guardian, https://www.theguardian.com/politics/2022/oct/11/uk-to-designate-china-a-threat-in-hawkish-foreign-policy-shift, (Access Date: June 15, 2026).
[v] “For Britain, China remains a ‘threat’ – but one worth doing business with”, CNN; https://edition.cnn.com/2026/01/27/uk/uk-china-relations-starmer-visit-intl, (Access Date: June 15, 2026).
