EU hardens trade defences

Why it matters

The European Union’s tougher line on Chinese industrial policy is no longer just rhetoric. Brussels has already imposed five-year countervailing duties on Chinese electric vehicles, restricted Chinese access to parts of the bloc’s public-procurement market, and opened subsidy investigations into Chinese companies operating in Europe. The common thread is the Commission’s claim that Chinese state support is distorting competition inside the EU single market. For companies that sell into Europe, that means higher barriers can now come not only through tariffs, but also through procurement rules and subsidy scrutiny. ### What has Brussels actually done already? On October 29, 2024, the European Commission imposed definitive countervailing duties on imports of battery electric vehicles from China for five years after concluding that the Chinese EV value chain benefited from unfair subsidisation that threatened injury to EU producers. The duty rates ranged from 17.0% for BYD and 18.8% for Geely to 35.3% for SAIC, with Tesla assigned 7.8% after an individual examination. (ec.europa.eu) On June 20, 2025, the Commission also adopted its first measure under the International Procurement Instrument, excluding Chinese companies from EU government purchases of medical devices worth more than €5 million and limiting successful bids to no more than 50% Chinese inputs. Brussels said exceptions would apply where no alternative suppliers exist. (ec.europa.eu) ### Why is the EU saying these measures are necessary? The Commission’s own China trade page says the economic relationship is “critically unbalanced” and points to asymmetry in market opening, a widening goods deficit and what it calls systemic distortions from China’s economic model. EU goods trade with China reached €732 billion in 2024, while the EU goods deficit widened to €359.9 billion in 2025, according to the Commission. (ec.europa.eu) An April 10, 2024 Commission report on state-induced distortions in China’s economy said Chinese legislation, industrial policy, state-owned enterprises and preferential access to finance can affect prices and costs in ways relevant to EU anti-dumping cases. The Commission said the report was designed to support ongoing and future trade-defence investigations. (policy.trade.ec.europa.eu) ### Is this just about tariffs on imports? The Foreign Subsidies Regulation, which started to apply on July 13, 2023, gave the Commission powers beyond classic anti-dumping and anti-subsidy cases. Brussels says the law lets it address distortions caused by subsidies from non-EU governments inside the single market, including in acquisitions and public procurement. (policy.trade.ec.europa.eu) On February 3, 2026, the Commission opened an in-depth investigation into Goldwind’s wind-turbine business in the EU, saying it had preliminary concerns the Chinese company may have received grants, preferential tax measures and loans that could distort competition. The Commission said it had begun looking at companies in the EU wind sector in April 2024. (competition-policy.ec.europa.eu) ### What does this mean for exporters and manufacturers? European market access now depends on more than customs classification and price. An exporter can face tariffs if Brussels finds unfair subsidisation, procurement limits if a sector becomes subject to reciprocity rules, and in-depth scrutiny if foreign financial support is seen as distorting competition in the EU. That is an inference from the Commission’s use of separate instruments across EVs, medical devices and wind equipment. (ec.europa.eu) For manufacturers, the medical-devices measure is especially concrete. Bids for covered EU public contracts cannot include more than 50% Chinese inputs, a rule that can change sourcing decisions even for companies not based in China. ### How far could this go from here? The Commission said the EV duties will remain in force for five years unless an expiry review is opened before they lapse, and it said it will monitor the measures to prevent circumvention. (ec.europa.eu) Importers can seek refunds if they believe the subsidy margin is lower than the duties paid. In the Goldwind case, the Commission said the in-depth investigation could end with commitments by the company, redressive measures or a no-objection decision. (ec.europa.eu) The IPI framework also allows the medical-devices restrictions to be suspended or withdrawn if China offers what Brussels calls concrete and verifiable solutions. (ec.europa.eu)

Key numbers

• On June 20, 2025, Brussels barred Chinese firms from EU medical-device tenders above €5 million and capped Chinese inputs at 50%.
• The duty rates ranged from 17.0% for BYD and 18.8% for Geely to 35.3% for SAIC, with Tesla assigned 7.8% after an individual examination.
• EU goods trade with China reached €732 billion in 2024, while the EU goods deficit widened to €359.9 billion in 2025, according to the Commission.
• The Foreign Subsidies Regulation, which started to apply on July 13, 2023, gave the Commission powers beyond classic anti-dumping and anti-subsidy cases.

What happens next

• The Commission said the EV duties will remain in force for five years unless an expiry review is opened before they lapse, and it said it will monitor the measures to prevent circumvention.
• In the Goldwind case, the Commission said the in-depth investigation could end with commitments by the company, redressive measures or a no-objection decision.
• The next tests are sector-by-sector: ongoing Foreign Subsidies Regulation cases and enforcement of five-year EV duties already in force.

Sources

• ec.europa.eu
• ec.europa.eu
• policy.trade.ec.europa.eu
• policy.trade.ec.europa.eu
• competition-policy.ec.europa.eu
• ec.europa.eu

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