Brussels Pushes Beijing On Trade Gap

The European Commission has told China it wants "tangible results" on a trade gap Spanish reporting puts at about €360 billion a year (eldiario.es, La Vanguardia). German media has rendered that as roughly €1 billion a day flowing to China (Euronews). It is a useful political number, but it needs handling with care. A trade deficit is the gap between what Europe buys from China and what it sells back. It is not cash disappearing down a drain.

Still, the pressure behind the figure is real. For Malta, this is not a distant Brussels argument. A small, import-heavy economy feels the price of trade measures quickly, whether through cars, electronics, machinery, solar equipment or consumer goods arriving through the same commercial arteries that stock every shop from Ħamrun to Għawdex. The harder question is whether the EU’s legal machinery, designed to test one product at a time, can respond to a Chinese industrial strategy organised across whole supply chains.

Case-by-case law versus supply-chain competition

Trade Commissioner Maroš Šefčovič’s deadline sounds firm, but EU trade defence is not a switch the Commission can simply flick. To impose anti-dumping duties, meaning taxes on imports sold in the EU below their home-market price, Brussels must prove the dumping is happening, show that EU producers are being harmed, and establish a direct causal link between the two (European Commission, EU Regulation 2016/1036).

Anti-subsidy cases work in much the same way. The Commission has to identify a specific government handout and trace the damage it causes (WTO SCM Agreement). Each investigation usually takes about fourteen months. "Chinese overcapacity" may describe the economic problem, but it is not, by itself, a legal finding.

The machinery is already moving. Chinese tyre makers increased their European market share from about 18% in 2021 to more than 30% in 2025, and proposed duties could reach 45.3% for some producers (Le Figaro). Electric vehicle tariffs have set a precedent. But each case protects one part of European industry while raising costs for importers, downstream factories and, sometimes, consumers. In Malta, where the industrial base is small and the economy depends heavily on imported inputs and finished goods, that second effect matters.

Four capitals, four risk calculations

This is not a simple "Europe versus China" story. Each capital is doing its own calculation, because each faces a different bill.

Germany is moving towards a tougher EU line, but with obvious anxiety about retaliation. More than 100,000 job cuts have been announced in its auto sector, according to Euronews, though Kiel-based research suggests only about a third of Germany’s losses in world markets can be traced to Chinese competition. The rest comes from high energy costs and domestic weaknesses (FAZ).

That distinction matters. China’s share of Germany’s gallium imports, a metal used in chips and LEDs, rose from 28.9% in 2023 to 47.4% in 2025 (Merkur). If Beijing restricts gallium exports, German chip and electronics firms feel the effect quickly. Berlin wants targeted tools and more diversified supply chains, not a tariff spiral (Spiegel).

France is among the EU’s most hawkish voices on Chinese trade. It has warned that Chinese plug-in hybrids currently fall outside EV-specific tariffs, creating a gap that redirected sales could exploit (Le Figaro). Spain supports closer monitoring but worries about retaliation against pork, wine and spirits exports (Vinetur).

The Netherlands has tightened controls on chipmaking-equipment exports to China while lobbying Washington against further restrictions that could damage ASML, its biggest technology company (Reuters). The countries calling most loudly for tariffs are not always the ones most exposed to retaliation. That mismatch limits how far the EU can move as one bloc.

The causality test Brussels cannot skip

WTO rules require the Commission not to blame dumped imports for injury caused by other factors (WTO Anti-Dumping Agreement). If Germany’s industrial weakness is partly the result of energy costs and underinvestment, Brussels cannot lawfully put the entire damage on Chinese pricing. The line between foreign unfairness and domestic failure will decide how many cases the Commission can actually win.

Until October, the deadline gives Brussels leverage. After that, the test becomes harder: whether product-by-product legal files can add up to a response big enough for the scale of the problem.

The costs will not fall evenly. Some workers will be shielded by new duties. Some factories will pay more for inputs. Some consumers will face higher prices. And the first to feel Chinese retaliation may be Spanish pork farmers, German auto suppliers or Dutch chip-equipment firms, not the governments most eager to sound tough in Brussels.