As the European Union (EU) intensifies its negotiations with Beijing to address its massive trade deficit with China, which has reached $360 billion, the relationship is increasingly being described as having evolved into an outright trade war. The economic pressure policies and embargoes implemented by the Trump administration in the United States (US) are aimed at curbing China’s rise in the global struggle for leadership. China’s economic ascent, which has reached a point where it is becoming almost impossible to halt, has begun to raise serious concerns not only in the US but also among EU member states.
According to economic growth projections, China is expected to catch up with and surpass the US, the world’s economic superpower, by 2036.[i] China’s current growth figures, supported by an economic capacity of $20 trillion, are causing concern in both the US and other Western powers. Indeed, four of the world’s ten largest economies—Germany, the United Kingdom, France, and Italy—are located in Europe.[ii] China’s enormous manufacturing capacity and the influx of its low-cost products into global markets, particularly European markets, are intensifying concerns about industrial closures, job losses, and unfair competition across European industry.[iii]
The rapidly growing market share of Chinese brands in sectors where European industry has traditionally been strong, including electric vehicles (EVs), hybrid vehicles, electronics, and machinery imported from China, has prompted the EU to introduce protective measures and impose high tariffs.[iv] China’s retaliatory measures in response to these EU actions have resulted in an open trade war between the two sides. On the one hand, EU Trade Commissioner Maroš Šefčovič has been holding high-level talks in Beijing to rebalance trade relations and achieve “tangible” results.[v] On the other hand, concerns are growing that conditions in European markets have reached an unsustainable point. Germany’s automotive industry, for instance, has announced plans to cut more than 100,000 jobs in the coming years, while it was previously reported that the EU had already lost 250,000 industrial jobs in 2025.[vi]
Although the relationship between the EU and China is increasingly characterized as a trade war, investment, supply chains, the energy transition, and technological cooperation continue as a result of their mutual economic interdependence. This interdependence, however, is increasingly being transformed into an instrument of pressure and power. The US, and the Trump administration in particular, is the actor that has made the most explicit use of such instruments. The EU has also criticized the Trump administration for this approach. Nevertheless, the US objective is to preserve the existing status quo in the international system and, by extension, its position as the “world’s economic superpower.” In the words of Trump and his team, the goal is to “Make America Great Again.”
In pursuit of this broader American grand strategy, economic pressure tools are being deployed against countries around the world, including European states, and particularly against China. Although the EU criticizes the Trump administration for its approach, it has itself begun adopting similar protectionist measures against China. Meanwhile, China continues its rapid and relatively quiet economic rise, criticizing the pressure policies of Western actors and emphasizing economic independence. The EU, in turn, is striving to preserve its economic relations with China while simultaneously seeking to strengthen its own industrial base.
Focusing solely on high growth rates is insufficient to explain China’s rise within the global economic system. Since 1978, the Chinese government has gradually transformed an economic model based on low-cost manufacturing into one increasingly driven by technology, automation, research and development, and strategic industries. As a result, China has evolved into a formidable competitor not only in terms of labor costs but also in advanced technology and high-value-added manufacturing, areas in which Europe has traditionally held a competitive advantage. China’s capacity to translate its economic scale into technological, commercial, and geopolitical influence has therefore become a major source of concern for Western powers.
Europe’s dependence on China for the equipment and technologies used in industrial production is increasing. Although cheaper Chinese machinery and components help European businesses reduce their costs, this trend also risks forcing small and medium-sized enterprises and domestic manufacturers out of the market or undermining their production capacity. This, in turn, represents a long-term threat to Europe’s strategic manufacturing capabilities.
When considering possible future scenarios, the first possibility to assess is a trade settlement combined with managed competition. In this context, the EU and China are expected to continue negotiations on the trade deficit, subsidies, and market access. Price undertakings in specific sectors, investment agreements, or reciprocal concessions could be put on the table. However, such an arrangement would not eliminate the existing problems facing European industry or its dependence on China. This option can therefore be considered unsustainable in the long run.
It seems highly unlikely that the ongoing negotiations will deliver lasting and definitive benefits for the EU. Accordingly, a second scenario would involve the EU unilaterally adopting significantly more protectionist measures, thereby deepening its trade war with China. An expansion of EU tariffs, an escalation of Chinese countermeasures, and the use of critical inputs as instruments of commercial pressure would make economic relations increasingly confrontational. This, in turn, could raise production costs across Europe, drive up product prices, and ultimately intensify inflationary pressures.
The most plausible scenario is that Europe will restructure its industrial policy while maintaining protectionist measures against China to buy time for this transition. In other words, the EU will seek to use protective measures as a temporary instrument while simultaneously strengthening technology investment, joint European financing, and production capacity in critical sectors. However, this transformation will also require substantial financial resources and sustained political commitment over the long term.
[i] “China GDP to surpass US around 2035, years later than previously expected, Goldman Sachs predicts”, SCMP, https://www.scmp.com/economy/china-economy/article/3202752/china-gdp-surpass-us-around-2035-years-later-previously-expected-goldman-sachs-predicts, (Date Accessed: 09.10.2026).
[ii] “GDP by Country (2026) – IMF”, World Parameters, https://www.worldometers.info/gdp/gdp-by-country/, (Date Accessed: 09.10.2026).
[iii] “Çin ve AB, ekonomik ve ticari ilişkilerde yol ayrımında”, AA, https://aa.com.tr/tr/dunya/cin-ve-ab-ekonomik-ve-ticari-iliskilerde-yol-ayriminda/4081958, (Date Accessed: 09.10.2026).
[iv] “AB, Çin’e karşı ticarette daha sert önlemlere hazırlanıyor”, Bloomberg HT, https://www.bloomberght.com/ab-cine-karsi-ticarette-daha-sert-onlemlere-hazirlaniyor-3790721, (Date Accessed: 09.10.2026).
[v] “EU-China trade tensions: Five things to know as Brussels and Beijing face crunch talks”, Euronews, https://www.euronews.com/2026/10/06/eu-china-trade-tensions-five-things-to-know-as-brussels-and-beijing-face-crunch-talks, (Date Accessed: 09.10.2026).
[vi] “EU sets October deadline to get ‘tangible’ results with China”, Euronews, https://www.euronews.com/2026/06/29/eu-sets-october-deadline-to-get-tangible-results-with-china, (Date Accessed: 09.10.2026).
