Europe Follows the U.S. in Closing the Gates on China’s Low-Cost Export Surge, as EU-China Trade War Escalates

Tariffs to Be Imposed Even on Small Direct Purchases, with Fines to Follow from 2028
A Chain of Regulatory Measures Expands from Raids to Countervailing Duties
EU: Trade Imbalance with China Is Unsustainable as Tensions Edge Toward Full-Scale Confrontation

Trade tensions between the European Union (EU) and China are expanding into a broader confrontation. What began as a dispute over subsidies for Chinese electric vehicles has spread across steel, batteries, solar power, and e-commerce platforms, while the EU’s response has shifted from investigations toward tariffs and import restrictions. As the bloc’s trade deficit with China continues to widen alongside persistent Chinese overcapacity, the price competitiveness of Chinese products has emerged as a new focal point of EU trade policy.

$3.5 Charge on Chinese Parcels Starting July 1

On June 23 (local time), the European Commission announced that it will impose a fixed tariff on low-value parcels worth less than approximately $175 beginning July 1. The measure directly targets the pricing advantage enjoyed by Chinese platforms such as AliExpress, Temu, and Shein. Under the new rules, shipments valued below approximately $175 will face a tariff of $3.5 per package, while an additional processing fee will be introduced in November. Small direct-purchase goods that previously entered the market effectively duty-free will now incur added costs.

The move reflects growing concern among EU member states that China’s low-cost export offensive can no longer be left unchecked. Danish Economy Minister Stephanie Lose said the measure would help restore fair market conditions so European companies can compete on equal terms and would curb the uncontrolled influx of ultra-cheap Chinese goods. European Commission President Ursula von der Leyen likewise described it as a measure aimed at controlling the flood of small packages arriving from China.

Another key aspect of the initiative is the transfer of legal responsibility to the platforms themselves. Until now, consumers were treated as importers, allowing platforms to avoid liability when products caused problems. Going forward, however, Chinese platforms will bear direct legal responsibility for product safety and regulatory compliance. Violations could result in fines of up to 6% of annual import value beginning in 2028. The approach mirrors the regulatory direction adopted by the United States. After a surge in Chinese direct-to-consumer shipments, President Donald Trump signed an executive order in April of last year abolishing the de minimis exemption. The objective was to prevent discriminatory treatment against domestic retailers and block the inflow of products that fail to meet safety standards.

Safety concerns surrounding Chinese products have repeatedly surfaced across Europe. According to French authorities, more than 60% of toys sold through Chinese platforms failed to meet safety requirements. Customs authorities are also struggling to process tens of millions of shipments daily, leaving a substantial volume of goods effectively entering the market without inspection. According to French newspaper Le Monde, approximately 4.6 billion parcels valued below about $175 entered Europe during 2024. That figure represents more than a threefold increase from 1.4 billion parcels in 2022, with 91% originating from China. In response, the EU has decided to establish a European Customs Authority in Lille, France, to unify customs systems currently fragmented across the bloc’s 27 member states. Beginning in 2028, an integrated data platform will be launched to monitor the location of Chinese parcels in real time.

EU Broadens Front Against Overcapacity

The latest tariff measures targeting Chinese platforms are part of a broader regulatory trajectory. The EU has steadily escalated pressure on Chinese platforms over recent years. One prominent example was the raid on Temu’s European headquarters. Late last year, EU regulators conducted a search of Temu’s Dublin office in Ireland to investigate whether the company had benefited from unfair subsidies provided by foreign governments. The probe was launched under the Foreign Subsidies Regulation (FSR), which allows the EU to take action against companies receiving excessive support from governments or public institutions. Such support includes not only tax breaks and preferential treatment but also interest-free loans and low-cost financing.

When first introduced, the FSR primarily focused on large mergers and acquisitions and public procurement bids. However, as Chinese overcapacity increasingly pressured both European manufacturing and distribution networks, the scope of enforcement expanded rapidly. Temu’s business model touched nearly every area the EU considers sensitive under the FSR. Ultra-low-priced products, large-scale discount coupons, free shipping, substantial advertising expenditures, and rapid user growth combined to disrupt pricing structures across Europe’s retail sector. Regulatory concerns intensified further as Temu surpassed 100 million monthly users within the EU.

The EU has already used subsidy-related concerns as a central justification in its countervailing-duty investigation into Chinese electric vehicles. Brussels concluded that support from the Chinese central government, local governments, state-owned financial institutions, and the battery supply chain had artificially lowered vehicle prices. The same logic is now being applied to the pricing structures of Chinese online platforms. In effect, the industrial defense rationale initially aimed at Chinese electric vehicles has spread into the online retail ecosystem. The EU previously investigated Chinese state-owned rail equipment manufacturer CRRC over a Bulgarian tram procurement bid in 2024, and also conducted raids on the Polish and Dutch offices of Chinese security-scanning equipment maker Nuctech during the same year.

Trade Deficit Fuels Escalating Frictions

These developments demonstrate that the EU’s trade response toward China is expanding into a comprehensive regulatory campaign. As electric vehicles, rail equipment, security-scanning equipment, and e-commerce platforms all come under scrutiny, the focus of EU enforcement is shifting toward the broader pricing structure of Chinese goods. Brussels appears increasingly convinced that China’s industrial model—combining government subsidies, overproduction, and low-cost exports—is exerting direct pressure on European markets.

Trade imbalances are also intensifying the regulatory response. According to the European Commission, the EU’s merchandise trade deficit with China reached approximately $421 billion last year. That marked a significant increase from roughly $365 billion in 2024. More recently, the monthly deficit has expanded to an average of approximately $1.17 billion per day, deepening concerns across Europe’s manufacturing sector. China is reducing imports from the EU while maintaining exports to Europe, reinforcing its surplus position. Electric vehicles, batteries, solar panels, steel products, chemicals, machinery, and ultra-low-cost consumer goods are all flowing into European markets simultaneously, forcing defensive measures to expand across multiple industries.

As a result, calls are growing within the EU to accelerate trade-defense mechanisms against China. France has urged the adoption of rapid tariffs and quotas similar to the United States’ Section 301 framework, while Germany, Poland, the Netherlands, and Belgium have also supported stronger measures against low-cost Chinese imports. Policymakers increasingly believe that existing anti-dumping and countervailing-duty procedures are insufficient to keep pace with the scale and speed of Chinese overcapacity.

The measures under consideration are becoming more aggressive. Discussions have emerged regarding a solidarity fund to support member states and industries harmed by trade disputes with China, alongside proposals for product-specific quotas, emergency tariffs, and supply-chain diversification mechanisms. These tools are intended as safeguards against potential Chinese retaliation. While member states do not share identical interests, there is broad agreement on the need to contain Chinese overcapacity. The shift underscores the extent to which the EU increasingly views China not merely as a trading partner, but as a source of pressure on European industrial competitiveness.

China, meanwhile, has not remained passive. In a statement issued late last month, China’s Ministry of Commerce warned that if Europe were to unilaterally introduce new trade instruments and discriminatory measures, China would respond resolutely and take effective actions to protect its interests. The ministry also urged Europe to comply with World Trade Organization (WTO) rules, uphold free trade and fair competition, and firmly oppose protectionism and unilateralism. Even so, experts believe a full-scale trade war would also impose significant costs on China, making targeted retaliation the more likely course. Potential measures include restrictions involving rare earths, agricultural imports, licensing and regulatory reviews of European companies operating in China, and anti-dumping investigations into selected products. One trade specialist noted that unless the gap in perceptions between China and the EU narrows, a pattern of managed confrontation marked by recurring trade restrictions and selective retaliation is likely to persist.