Brussels, 11 September 2026 — EBM Newsdesk Analysis — By Anthoy Gill
Chinese exports have jumped by more than $150bn even as the country’s own imports of manufactured goods have grown by barely $15bn a year on average since 2020, according to Bloomberg reporting cited by trade economists this week. The gap between what China sells the world and what it buys back has widened into something structural rather than cyclical, and Europe — not the United States — is now absorbing most of it. The EU’s goods deficit with China grew 15% to €360bn last year and expanded to €98bn in the first quarter alone, the highest since 2022, with all 27 member states running a shortfall.
The mechanism is straightforward once you see it. Beijing has built industrial capacity far beyond what its own consumers can absorb — enough, by some estimates, to supply two-thirds of global car demand and more than half the world’s steel, aluminium and ships. With the American market substantially closed off by Trump-era tariffs, that surplus capacity has redirected toward the next largest open market. Europe is open, wealthy and, until very recently, comparatively unprotected against this specific kind of pressure.
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SubscribeThis is not the same shock the West absorbed after 2001. China Shock 2.0 is landing on the sectors Europe still makes real money from — electronics and automotive — rather than the low-value manufacturing the first wave hollowed out. Germany is the clearest casualty: the country now buys more high-end machinery and factory equipment from China than it sells there, a reversal from a $900m surplus to a $600m deficit in less than a year. EU imports of Chinese-made cars topped one million units for the first time last year, up roughly 30% on 2024, and Chinese brands crossed 10% of total EU auto sales in May despite tariffs of up to 35.3% sitting in place.
That tariff experience is the uncomfortable part of this story. The EV duties were supposed to prove Brussels could hold the line. Instead, Europe’s standoff with China on trade has become a lesson in what happens when a bloc fights on multiple fronts without a coherent strategy behind it — Brussels is now quietly weighing whether to swap the EV tariffs for voluntary export limits and minimum pricing instead. Chinese exporters have simply adapted: routing production through European factories, absorbing tariffs into thinner margins, and continuing to gain share regardless.
The scale of the imbalance is what makes this different from an ordinary trade dispute. The EU-China deficit has already hit €98bn for the first quarter, and in volume terms the gap has grown more than fivefold over the past decade — a pattern consistent with genuine industrial displacement rather than currency noise. Fitch has gone further, noting that China’s trade surplus with the EU now exceeds its surplus with the US for the first time in thirty years of data, and warning that net trade will start subtracting from European growth outright.
Brussels has not been passive. Anti-subsidy tariffs, a Foreign Subsidies Regulation used to block Chinese-backed infrastructure bids, and a draft €200bn Industrial Accelerator Act mandating EU-made content thresholds across batteries, EVs and steel are all live tools. The response from Brussels has been to get considerably tougher as deindustrialisation fears have grown, and Trade Commissioner Maroš Šefčovič has been unusually blunt about the trajectory: China’s exports to the EU keep rising while European market share inside China keeps shrinking.
Whether any of this holds depends on unity Europe has struggled to sustain before. China’s own read on the situation is reportedly that European leaders are too divided, too distracted by Ukraine, and too politically fragile to mount a sustained trade confrontation while managing a parallel rift with Washington. The EV tariff retreat suggests that read may not be wrong.
Where I Land: The $150bn figure is a symptom, not the disease. The actual problem is that China no longer needs the industrial inputs Europe used to sell it, while Europe has become steadily more dependent on what China makes instead — a dependency that hands Beijing a source of leverage no tariff schedule fully offsets. Europe has the regulatory tools to respond. What it hasn’t yet shown is the political discipline to use them consistently, and China is watching that gap as closely as anyone.
