Hoping for unity in the face of $1.412 trillion in US tariffs... But China-EU trade conflict has only intensified

Exchange of tariff and non-tariff retaliations

Spotlight on the China-EU Summit at the end of this month

Europe and China, which seemed to be drawing closer in response to tariff pressures from US President Donald Trump, are once again embroiled in a trade conflict.

According to AFP and other sources on the 5th, French Finance Minister Éric Lombard strongly criticized the United States, Russia, and China at an economic forum in Aix-en-Provence, stating, "Three bullies have appeared, breaking all the rules and upturning the game board, harassing the kids who were playing nicely." He specifically argued that China's policy of maintaining production capacity to exceed 50% market share in certain industries would destroy European industries. He claimed that the European Union (EU) should expand tariffs on Chinese imports beyond electric vehicles and steel to the entire industrial sector.

The trade conflict began last year when the EU imposed tariffs of up to 45.3% on Chinese electric vehicles, citing issues with subsidies. In retaliation, the Ministry of Commerce of the People's Republic of China began an anti-dumping investigation into EU-produced brandy and announced on the 4th of this month the final decision to impose tariffs on the product. Over the next five years, anti-dumping tariffs between 27.7% and 34.9% will be applied. China continued pressure on EU agricultural products, extending the anti-dumping investigation period initiated last month targeting EU pork until December this year. No additional tariffs have been imposed on pork yet.

This escalation contrasts with recent attempts at trade cooperation. Earlier this year, amid the ongoing US-led tariff war, both sides seemed to be taking steps to draw closer. In April, during a visit by Spanish Prime Minister Pedro Sánchez, Chinese President Xi Jinping emphasized, "China and the EU must join forces to block unilateral bullying." In May, China lifted sanctions on members of the European Parliament after four years, and in April, the European Parliament announced its discussions to lift sanctions on China had reached the final stage.

However, fundamental differences remain between the two sides when it comes to trade. The EU's trade deficit with China is widening. Last year, the EU recorded a €304.5 billion deficit in merchandise trade with China—a 67% increase compared to four years ago.

Both sides have also exchanged non-tariff trade retaliations. On the 6th, China's Ministry of Finance announced that, for purchases of medical devices by Chinese central and local governments exceeding 45 million yuan (about ₩8.5 billion), participation by EU companies would be excluded. In addition, non-EU companies participating in Chinese government procurement must ensure that the share of medical devices sourced from the EU does not exceed 50% of the total contract value. Last month, the EU banned Chinese companies from bidding for public procurement contracts for medical devices worth over €5 million (about ₩7.9 billion), and limited the share of Chinese components in successful bids to less than 50%. Recently, the EU has also included negotiations on China's rare earth export controls as part of its trade talks with China.

Amid these developments, there is talk that the China-EU summit scheduled for the end of this month in China may be scaled back.

Reporting by Kim Joo-wan kjwan@hankyung.com