EU and China strike interim trade deal that could cut Chinese hybrid exports, EU envoy says

HONG KONG (AP) — The top trade envoys for China and the European Union agreed Friday on a broad initial deal following two days of talks aimed at calming escalating tensions over trade imbalances, the EU trade commissioner said.

Neither side provided clear details on the preliminary deal, but European Commissioner for Trade Maros Sefcovic said it includes lower tariffs for some European goods to China as well as measures to stabilize rare earth supply chains.

The EU trade envoy said the deal could cut up to 50% of Chinese electric and plug-in hybrid vehicle imports to the EU and could lower tariffs on products benefiting “almost every” EU nation. The deal would require approval from leaders across the 27-nation EU.

He said that “by this step we are actually preventing several millions of car exports from China to the European Union.”

The two sides were seeking to resolve key factors behind China’s growing trade surplus, which hit 360 billion euros ($410 billion) last year.

China’s Commerce Ministry posted online that Chinese Commerce Minister Wang Wentao expressed concerns about the EU’s recent restrictive measures. He said that China is not the root of the EU’s problems but a partner in solving them.

The head of the European Automobile Manufacturers’ Association, Sigrid de Vries, said that the deal appears to avert further instability in the EU and “can help facilitate the transition to a new era of Chinese presence in the European market in an orderly way and this is in the long-term interests of all parties.”

Sefcovic said he will brief EU leaders meeting in Brussels next week and seek their approval.

“They would have to see that this is convincing enough to take the other steps,” he said. “We are in a situation that they (China) could put under the threat whole sectors in the European industry, literally thousands of jobs and the public opinion and the leaders clearly expect very fast action from our side.”

The two sides will meet next by video in January and then in person in March.

Growing tensions

China has been pushing for the EU to stop blocking Chinese imports of advanced computer chipmaking machines, restrictions imposed on national security grounds at Washington’s behest.

Earlier, Sefcovic had said the talks this week were the culmination of three months of intensive work. He had set an October deadline for meaningful results on trade rebalancing.

Earlier in the week, the Chinese Commerce Ministry issued a statement urging the EU to avoid protectionist measures, warning that such moves could backfire.

Trade tensions have grown in recent months, with both sides imposing or considering curbs on each other’s imports.

The EU has moved to limit imports of Chinese-made electric vehicles and EV batteries and enacted measures to protect the European steel industry. It also is limiting duty-free imports of e-commerce small parcels, essentially targeting Chinese fast fashion firms.

Last week, China launched an anti-dumping investigation into imports from the EU of p-nitrotoluene, a chemical compound used in dyes and pharmaceuticals.

Chinese officials and businesses have raised concerns over reports some EU members are pushing for new measures to protect local industries.

China had a global trade surplus exceeding $1 trillion last year

Worries over surging Chinese exports to Europe and other parts of the world in what some are calling a China shock 2.0 have deepened as the U.S., especially since President Donald Trump returned to the White House, has raised tariffs and enacted other measures to try to reduce its own huge trade deficit with Beijing.

Despite the backlash from some of its trading partners, China’s global trade surplus hit $1.2 trillion in 2025 and is forecast to surpass $1 trillion again this year.

The EU’s trade deficit with China widened to 103.34 billion euros (about $116 billion) in the second quarter, as imports rose to 153.63 billion euros ($172.3 billion), while European exports to China climbed to 50.3 billion euros ($56.4 billion), according to EU statistics.

And on Wednesday, Germany blocked the sale of a major logistics firm in the port of Hamburg to the state-owned Chinese shipping behemoth Cosco over security concerns.

“As Europe’s largest economy, Germany welcomes foreign investment. At the same time, some investments can endanger the country’s security,” the German economic ministry said in a statement. “The acquisition would have deepened dependencies and jeopardized the resilience of supply chains in Germany and the EU.”

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McNeil reported from Brussels and Kurtenbach reported from Mito, Japan. AP journalists Borg Wong in Beijing and Chan Ho-him in Hong Kong contributed