Šefčovič Says EU Is Walking a Tightrope on China as Brussels Lines Up December Trade Tools

Since the EU and China struck a hybrid-car import deal on Oct. 9, Brussels has been working out what comes next. After a meeting of the bloc's 27 trade ministers in Dublin on Oct. 23, Trade Commissioner Maroš Šefčovič said the EU is "walking a tightrope" with Beijing.

He said he is weighing conventional trade measures against broader political considerations. "There are whole sectors under threat; each head of states and government is concerned that there might be potential heavy losses of the jobs," he said.

He added that the EU has to move "not only with the traditional trade techniques, but also with a very political approach, how to balance the trade between China and the European Union."

What the October deal does

Under the Oct. 9 agreement, the EU will set country-specific quotas allowing 350,000 Chinese hybrid cars into the market each year for four years, with a fixed annual adjustment rate of 6%. EU officials have described the arrangement as a cut of more than half in hybrid imports.

Šefčovič has said China also agreed to improve market access for several European products, from industrial goods to agri-food. He said Beijing would ease export-licensing procedures for EU firms seeking rare earths and permanent magnets.

The EU also secured tariff liberalization for auto parts, footwear, ice cream and olive oil, worth at least €225 million, according to a report by kratko.news.

The deal will not close the gap by itself. The EU's trade deficit with China runs at about €1 billion a day. Commission President Ursula von der Leyen said on Oct. 16 that progress in cars cannot fix the problem: "This is structural. This is unsustainable."

The December calendar

EU leaders gave the Commission a political mandate at last week's Brussels summit to work on a "kill switch". The tool would let the EU cut off or sharply limit China's access to the single market in the face of economic distortions. France and Germany pushed the idea earlier this month.

Von der Leyen said the Commission will also build a "solidarity mechanism" for member states or industries targeted by coercion or retaliation, and will use existing safeguards, including tariffs and quotas, where industries ask for them.

The Commission will present a plan in December for a separate instrument called Diversify EU. Von der Leyen said it will be country-agnostic and help companies cut dependence on a single supplier. The Commission also hopes to table the kill-switch proposal before the December leaders' summit.

Another unilateral measure aimed at Chinese chemicals and industrial machinery could land in December too, according to Euronews. Macron said on Oct. 16 that the bloc should act on chemicals, plastics and ferroalloys.

Šefčovič said plastics are "closest" to a formal step. "We are looking into whether all the requirements to launch an investigation are in place," he said. He appeared to be referring to a request for curbs on PET imports.

Dialogue first, with a stick in reserve

Irish Foreign Minister Helen McEntee said every member state wants the Commission to keep talking to Beijing. "There's a very clear desire for us to move beyond that (hybrid cars) and to look at other areas, chemicals, machinery," she said. She added that the Commission could still use existing trade defence tools to fix some imbalances.

Lithuania's Kestutis Budrys said pharmaceuticals could be covered. Greece's Haris Theoharis said years of EU talks with China had produced nothing, but that results were now appearing. France's Nicolas Forissier said Chinese authorities respond to "clarity, frankness and firmness."

Ministers did not discuss short-term EU measures that could run alongside the talks.

Beijing's position and the economics

China rejects the idea that it is the source of Europe's problems. Beijing has previously said it is a partner in addressing them, not their underlying cause.

China's own numbers show why the pressure is building. The economy grew 4.5% in the July-September quarter from a year earlier, up from 4.3% in the prior quarter, driven by exports. Exports rose 36% in September, and the January-September trade surplus reached $938 billion. China is on track to pass last year's record $1.2 trillion surplus.

Max Zenglein of The Conference Board said the headline growth figure masks "widening disparities across industries, regions, and households." Domestic demand remains weak after a yearslong property downturn. Many subsidised goods are therefore shipped abroad at competitive prices.

The EU is split on how far to go, because cheap imports also lower living costs. Brussels has tried to moderate its actions to avoid retaliation. Euronews reports that the new defence measures carry exactly that risk.

What comes next

Technical-level talks with Beijing continue to the end of the year. Šefčovič will hold a video conference with his Chinese counterpart in January, and the next political round is set for March 2027.

It is not yet clear whether Beijing treats the December measures as bargaining pressure or as grounds for countermeasures. The Commission has not yet published the kill-switch text.