EU hosts China's commerce minister in Brussels as trade tensions mount

China’s commerce minister, Wang Wentao, arrived in Brussels on Monday for two days of talks with the European Union’s trade chief, Maroš Šefčovič, an encounter shadowed by the sharpest strains in the bloc’s relationship with its second-largest goods-trading partner in years.

The European Commission confirmed the meeting on 22 June, and the South China Morning Post first reported that Wang would be in the Belgian capital on 29 and 30 June for a day of negotiations and a working dinner before travelling on to London. It followed an instruction from EU leaders, issued less than two weeks earlier, for the Commission to press Beijing through dialogue while preparing tougher defensive measures, according to Agence France-Presse.

The backdrop is a record imbalance. The EU’s goods deficit with China hit roughly €360 billion in 2025 — €359.9 billion, Euronews reported — a gap Brussels blames on a surge of state-subsidised Chinese exports. AFP, citing economic research, noted that between 2005 and 2024 Chinese companies received roughly three to eight times more government support than firms across the OECD.

Rare earths and electric vehicles at the heart of the talks

Two disputes dominate. The first is China’s tightening grip on rare-earth elements — the metals essential to electric-vehicle motors, wind turbines, jet engines and weapons systems. The European Parliament’s research service says Beijing imposed two waves of export controls in April and October 2025, with the second wave suspended until November 2026. European manufacturers complain of crippling delays: industry groups tracked by the EU Chamber of Commerce in China reported that fewer than a quarter of more than 140 licence applications had been approved by mid-September.

Šefčovič has framed the curbs as a test of trust.

This situation casts a shadow over our relationship. Therefore, prompt resolution is essential. — Maroš Šefčovič, European Commission vice-president for trade

The second flashpoint is electric cars. The EU imposed extra anti-subsidy duties in 2024 — about 17 percent on BYD, 18.8 percent on Geely and more than 35 percent on SAIC, on top of the standard 10 percent car tariff, the Atlantic Council reported. The measures barely dented the flow: Chinese car exports to Europe still rose 26 percent between 2024 and 2025, to almost 1.2 million vehicles. In January 2026 the Commission issued guidance on replacing the tariffs with minimum import prices, or “price undertakings,” though officials concede such floors are far harder to police for finished cars than for raw materials.

A bloc still divided on how hard to push

Brussels is assembling a harder toolkit even as it talks. Officials have floated a new “overcapacity” or supplier-diversification instrument to loosen China’s hold over chips and critical minerals, and from July the EU will cut its tariff-free steel quotas by 47 percent and double out-of-quota duties to 50 percent, according to the Atlantic Council. Tensions have been sharpened by the case of Nexperia, the Chinese-owned chipmaker whose Dutch operations were placed under state control, prompting Beijing to halt some chip shipments.

Yet the 27 member states do not agree on how aggressive to be. A joint paper from France, Italy, Spain, the Netherlands and Lithuania has urged faster use of tariffs and quotas, Euronews reported, while Germany — whose carmakers depend on Chinese sales — wants to protect access to that market. Beijing, for its part, has signalled it will retaliate against measures it deems unfair, having already targeted European cognac, pork and dairy. Its envoy to the EU, Cai Run, has urged restraint, telling a Brussels audience that the two sides were “partners, not rivals, and certainly not enemies.”

Why a small, open economy like Luxembourg is watching

For a trade-dependent member state such as Luxembourg, the stakes are concrete. The national statistics office, STATEC, reported that the Grand Duchy imported €922 million of Chinese goods in 2025 and exported €346 million — chiefly industrial valves and copper foil. China accounts for only about 3 percent of Luxembourg’s imports by value, but its weight in strategic categories is climbing fast: it supplied 20 percent of the country’s electrical, audio and video equipment imports over the first ten months of 2025, up from 3 percent a year earlier, STATEC said.

That exposure cuts both ways. As an open economy that thrives on frictionless trade and inbound investment, Luxembourg has much to lose from a tit-for-tat tariff spiral — but also from supply shocks in the rare earths and components on which its neighbours’ factories rely. The Commission has said any new measures could be put to EU leaders over the autumn, with officials suggesting concrete steps by October. Monday’s talks in Brussels offered the clearest test yet of whether negotiation can still head off a broader confrontation.