EU chief pledges ‘all tools’ to reduce €1B-a-day China trade deficit

European Commission President Ursula von der Leyen has warned that the European Union is prepared to deploy every instrument at its disposal to address what she described as an “unsustainable” trade imbalance with China.

European Commission President Ursula von der Leyen has warned that the European Union is prepared to deploy every instrument at its disposal to address what she described as an “unsustainable” trade imbalance with China.

Von der Leyen said the bloc’s goods trade deficit with China had reached a critical stage, while warning that Europe was already experiencing what she called a “second China shock” through deindustrialization.

EU leaders called on the European Commission in June to deliver concrete results from its discussions with China and to ensure that the bloc has all the necessary instruments to defend its interests.

European Trade Commissioner Maroš Šefčovič, who is leading the talks, said he wanted to achieve tangible results by October.

In her State of the Union address to the European Parliament, von der Leyen said:

“Let me be clear: we will use all the tools at our disposal to rebalance our relationship. Words are good. But deeds are better.”

She also highlighted the EU’s dependence on China for a range of critical minerals, particularly rare earths.

“We need to urgently procure and build up our reserves,” she said.

Speaking to the European Parliament, von der Leyen said the bloc’s goods trade deficit with Beijing—running at roughly €1 billion ($1.15–$1.18 billion) a day—had reached a critical stage.

She stressed that fears of a “second China shock” driving European deindustrialization were no longer hypothetical, arguing that the effects were already being felt across Europe.

The warning comes as the EU seeks to address its trade imbalance with China and reduce its dependence on Beijing for critical raw materials. Potential measures could include stronger use of trade-defense instruments, such as anti-subsidy duties and safeguard investigations, as well as increased scrutiny of Chinese industrial exports.

The Commission’s tougher rhetoric could signal a more assertive phase in its economic engagement with Beijing, with European officials seeking concrete progress on market access, trade imbalances and critical supply-chain dependencies.