EU trade with China deteriorates further in Q1
Issue 249 | In collaboration with Mercator Institute for China Studies (MERICS) SOAPBOX
EU exports to China fell 7.5% year on year, while imports from China rose 2% in the first quarter of this year, pushing the quarterly deficit close to €95bn, or more than €1bn a day.
Almost every EU member state ran a deficit with China in March
The EU-China trade gap did not narrow in March. It widened.
Eurostat data show EU exports to China are slightly down year on year, while imports from China rose above €50bn in a single month. The result was a monthly deficit of €32.6bn, up from €30.9bn in March 2025.
Put differently, the EU imported almost three euros from China for every euro it exported there.
The weakness was not evenly spread. Germany’s exports to China fell 14% year on year in March, while Slovakia’s dropped 22%, presumably reflecting the pressure on the auto sector. And the imbalance was broad. Apart from small surpluses in Finland and Ireland, every EU member state recorded a trade deficit with China in March.
The trade data behind the EU’s China policy shift
The EU’s China policy shift is not coming out of nowhere. It is being pushed by a trade pattern that looks less temporary every year.
Imports
The 2022 spike has faded, but EU imports from China have not returned to their pre-2021 range. They appear to have settled on a much higher plateau.
If the surge had been only a one-off post-pandemic distortion, the EU could have waited for trade flows to normalise. But the data point to something more persistent. Imports from China remain far above their old range, while EU exports to China are sliding back.
This is the background against which Brussels is using more trade-defence tools, screening foreign subsidies, questioning procurement advantages and talking more openly about de-risking.
The issue is not that every Chinese import is a problem. The issue is that the aggregate flow remains very large, the deficit is widening, and the pressure is concentrated in sectors where price, scale, subsidies and industrial capacity matter
Exports
EU exports to China peaked in 2022. They have not recovered since. If the Q1 trend holds, EU exports to China in 2026 will be around 20% below their 2022 peak, taking them back close to pre-2019 levels. Since the peak, the decline has averaged roughly 5% a year.
As imports from China continue to grow, the export slide makes the EU’s China deficit even harder to contain.
Trade balance
The deficit tells the story more bluntly. The 2022 spike has partly faded, but the EU-China trade gap has not returned to its pre-2021 range. If the 2026 estimate holds, the deficit will be close to €390bn, more than double its 2020 level and not far from the 2022 record.
EU imports from China grew faster in volume than in value in Q1 2026
This follows a trend already visible in 2025. EU imports from China are rising more in physical volume than in value, pointing to continued price pressure. The average import value per kg in Q1 2026 was €6.7, down from €6.9 in the same period last year.
EU car imports from China jump 77% in Q1
Electric cars rose 32% by value, but the biggest rebound came from hybrids, with non-plug-in hybrids up 184% and plug-in hybrids up 145%. Taken together, EU imports of Chinese electric and hybrid cars surged 77% year on year in Q1 2026.
In Q1 2026, hybrids from China overtook battery-electric cars in EU import value for the first time in our post-2020 series. That is a notable shift. The EU-China car story is no longer only about EVs. Electric-car imports from China rebounded, but plug-in and non-plug-in hybrids rose much faster, pushing the combined hybrid category above pure electric cars.
EVs lose share in China’s EU car mix after tariffs
The timing is hard to ignore. EU duties targeted battery-electric cars from China. In Q1 2024, they still accounted for 86% of EU car import value from China. By Q1 2026, their share had fallen to 48%.
This is not only about tariffs. Some electric-car production has also moved closer to EU consumers, including Tesla’s Berlin plant. Still, the direction is clear: the electric-car category targeted by EU duties has lost weight, while hybrids have gained ground.
How China’s German import peak faded
We were curious to see what happened to China’s largest imports from Germany after the peak.
China’s imports from Germany reached their high point in 2021. So we took the largest product-level import lines that year and compared them with the same lines in 2025.
This is not the whole story of Germany’s weaker China trade. But it helps explain the direction of travel. Several of the product lines that once anchored Germany’s export strength in China, especially cars and car-related components, are now much smaller than they were at the peak.
China’s top import from Germany is now gold
China’s top import from Germany is no longer one of the usual German industrial champions. It is unwrought non-monetary gold.
In 2025, this customs line became China’s largest individual import from Germany by value for the first time. It remained the top line in January-April 2026. That is striking because gold was only fourth in 2024, fifth in 2023, and outside the top ten before 2023.
There is no need to read anything mysterious into this. Gold is a special product, and its value can be pushed up by price even when volumes fall.
The interesting point is the contrast. China is buying less of several products that used to define Germany’s export strength: cars, car parts and other high-value industrial goods. Against that backdrop, gold climbing to the top of the table neatly captures how unusual Germany’s China export story has become.
Spain is a similar example. More than one-third of China’s imports from Spain comes from copper ores and copper scrap, even though these categories are not among Spain’s top export lines overall and are hardly what most readers would associate with Spain’s traditional export strengths. The average import value of copper ores was 59% higher than a year earlier, while copper scrap was up 40%. In practice, China absorbs almost all of Spain’s copper ore exports.
EU food and farm exports to China fall back to decade lows
This should be a European strength, but the data say otherwise. EU agri-food exports to China fell 20% year on year in Q1 2026.
The category sits close to EU's Common Agricultural Policy, to farmers, to rural economies, and to the EU’s quality story built around geographical indications, protected names, origin labels and premium products. The EU defends these protected labels fiercely, and has made them part of its trade relationship with China.
But the numbers are moving in the wrong direction. EU agri-food exports to China reached €4.6bn in Q1 2021. In Q1 2026, they were back to €2.3bn, roughly half the peak and close to the weak levels seen a decade earlier.
This is not for lack of trying. EU agriculture commissioners regularly travel to China with business delegations and a clear promotion message. In April 2024, Commissioner Janusz Wojciechowski led a high-level agri-food mission to China with 72 EU companies and organisations. The trade data suggest very little success.
There is also a harder political backdrop. China has used trade-remedy measures against several EU agri-food categories, including brandy, pork and dairy. At the same time, the U.S. has recently presented a Chinese commitment to buy at least US$17bn annually in U.S. agricultural products, excluding separate soybean commitments.
The conclusion is uncomfortable. China’s agricultural purchases are increasingly part of high-level geopolitical bargaining.
The EU has a strong agri-food offer, a powerful quality narrative and years of promotion in China. But the numbers are not moving in the EU’s favour.
EU pork exports to China are on a downward trend
EU pork export volumes to China fell back in Q1 2026, down by more than 20% year on year. Since December 2025, EU pork and pig by-products have also been subject to Chinese anti-dumping duties. The trend predates the duties, but the new trade-defence layer adds another headwind.
China’s U.S. farm promise is a rebound, not a breakthrough
The White House calls the Trump-Xi agreements historic. The numbers suggest something more modest, a recovery.
In agriculture, the key is to separate soybeans from the rest of the basket, because soybean commitments follow a different track. Once soybeans are excluded, China Customs data show a sharp fall in China’s U.S. agricultural imports, from around US$19–20bn in 2021–2022 to just US$6bn in 2025.
Clean data, and it lands on a date that matters. This is the first full quarter after the Iran war, and the numbers read like a checklist of things that were supposed to take years.
Start with the one line you almost wave off. Germany's top single export to China is now unwrought gold — fourth in 2024, outside the top ten before 2023, first today. You're right that price inflates the value. But price doesn't reorder a table. Cars and car parts fell while gold climbed past them. And Germany has no active gold mines. So this isn't Germany selling what it makes. It's the old aristocrat selling the family gold to buy back the goods it used to build. A manufacturing power's largest line to China is now a metal it digs out of its own vaults. No gold price explains that sentence.
Spain's version is copper ore. Same shape: Europe ships China the atoms, China ships Europe the finished things.
Then the cars. EU duties hit battery-electric specifically. Pure-electric share of Chinese car imports fell from 86% to 48% — and hybrids came up 184% to fill the gap. The tariff worked exactly as written and changed nothing that mattered. I argued in The Great Detour that a tariff is a dam, not a wall: the flow doesn't stop, it routes. Here's the routing, on a one-year delay.
None of this is a forecast anymore. It's a receipt. I wrote before the war that the manufacturing center of gravity would keep sliding from one system to the other, and that Europe's industrial core would feel it first. Q1 is the first reading off that clock. The gold line is the tell: when your largest export to a country is the thing in your safe rather than the thing on your factory floor, the trade balance has stopped being about trade — and started being about which system still makes things, and which one is selling its vaults to keep buying them. That's the part the deficit number can't show you. I've written out where this leads on my page, if it's useful.
If the EU wishes to remain competitive, it should be planning long term. What's required is strong investing in automation, digital & AI infrastructure. That is the backbone for the idustry to grow. However, it would be necessary to limit capital outflows to the US and China, maximizing investment within the EU.
China is winning the EV race because of well-planned large investments in R&D and vibrant market competition: their cars just got better. EU should be focusing on creating a similar underlying, pro-tech and pro-risk market environment.
However, EU must invest more in the well-being of its citizens, increasing the social safety net. If basic needs are secured, EU citizens will be less risk-averse and contribute more to the market. In this context, the current militarization appears as a quite alarming and short viewed misallocation of resources.