EU builds new trade tools to cut China reliance, Sefcovic warns
Synopsis
The EU is burning through roughly 1 billion euro a day in trade deficit with China — and Brussels has finally said enough. With rare-earth disruptions, Nexperia export controls, and member-state nerves all in play, Trade Commissioner Sefcovic is pushing a dedicated new instrument to force strategic diversification. The catch: Spain already blinked when Beijing threatened retaliation.
Key Takeaways
EU Trade Commissioner Maros Sefcovic announced new trade instruments to reduce China dependence at the Brussels Economic Security Forum on 8 June .
The EU’s trade deficit with China is accumulating at roughly 1 billion euro a day , which Sefcovic called “clearly unsustainable.” China controls approximately 90 per cent of global rare-earth refining and 60 per cent of mining, creating acute supply risk.
Beijing’s export controls on Dutch firm Nexperia — critical to European automotive supply chains — sharpened EU urgency.
Spain backed away from a joint push with France for stronger trade defences after Beijing threatened retaliation.
EU chief trade enforcement officer Denis Redonnet signalled a formal new trade instrument proposal is imminent.
The European Union is developing new trade instruments to reduce its structural dependence on China, EU Trade Commissioner Maros Sefcovic announced at the annual Brussels Economic Security Forum on 8 June. Sefcovic described the bloc's current trade trajectory with Beijing as “clearly unsustainable,” citing a deficit accumulating at roughly 1 billion euro a day.
What Sefcovic Said
“We are using our existing tools more assertively. Where gaps exist, we are also building new tools… Diversification now requires a dedicated instrument,” Sefcovic said, according to a report by Euractiv. He called for geopolitical risks to be treated as “core business risks” and said the cost of resilience must be built into corporate models.
Sefcovic pointed specifically to last year’s disruptions in supplies of rare earths and semiconductor components after China tightened its supply chains, arguing these episodes made a policy shift unavoidable. China currently controls approximately 90 per cent of global rare-earth refining and 60 per cent of mining worldwide.
The Nexperia Factor
Tensions escalated further after Beijing imposed export controls on Dutch semiconductor company Nexperia, whose chips are largely assembled in China and are considered critical for automotive supply chains across Europe. The move reinforced EU concerns about single-supplier exposure in high-risk sectors.
“Recent industrial cases, in particular supplies of chips and rare earths, have reinforced my conviction that a step change is necessary. We understand the urgency for critical minerals but every high-risk sector must be weaned off single-supplier dependence,” Sefcovic said.
Member States Split on Response
The push for stronger trade defences is not uniformly backed within the bloc. In May, France and Spain had urged the European Commission to sharpen its trade defence tools against Chinese “overcapacity.” However, Spain subsequently distanced itself from the proposal, reportedly after threats of retaliation from Beijing — a sign of the political tightrope EU governments must walk between economic sovereignty and market access.
New Instrument on the Horizon
Denis Redonnet, the EU’s chief trade enforcement officer, had indicated last week that the Commission would soon propose a new trade instrument to address what he described as Beijing’s “very, very intense distortions” of the global economy. The precise design and legal scope of the proposed instrument have not yet been disclosed. Analysts expect the proposal to face scrutiny both from member states with deep trade ties to China and from Beijing itself, which has previously responded to EU trade actions with targeted counter-measures.
This comes amid a broader global recalibration of supply chains, with the United States, Japan, and other major economies simultaneously pursuing critical-mineral diversification strategies. Whether the EU can move with sufficient speed and internal consensus to make a structural dent in its China dependence remains the central question.
Point of View
But the harder story is internal coherence. Spain’s rapid retreat after Beijing’s retaliation threat exposes the bloc’s chronic collective-action problem: individual member states with large export interests in China will keep undermining unified trade policy. A new instrument is only as strong as the political will to enforce it, and that will has historically fractured at the first sign of Chinese counter-pressure. Brussels has identified the problem correctly; whether it can hold 27 governments together long enough to act on it is a different question entirely.
NationPress
28 Jul 2026
Frequently Asked Questions
What new trade tools is the EU developing against China?
The EU is working on a dedicated new trade instrument designed to reduce dependence on China across high-risk sectors, including critical minerals and semiconductors. Trade Commissioner Maros Sefcovic announced the move at the Brussels Economic Security Forum on 8 June, though the precise design has not yet been disclosed.
Why is the EU concerned about its trade relationship with China?
The EU is accumulating a trade deficit with China at roughly 1 billion euro a day, which Sefcovic described as “clearly unsustainable.” Last year’s disruptions in rare-earth and semiconductor supplies, along with Beijing’s export controls on Dutch chipmaker Nexperia, underscored the bloc’s vulnerability to single-supplier dependence.
What role does China play in global rare-earth supply?
China controls approximately 90 per cent of global rare-earth refining and 60 per cent of mining, giving it significant leverage over industries from electric vehicles to defence electronics. This concentration of supply is a core driver of the EU’s push for diversification.
Which EU countries support stronger trade defences against China?
France and Spain both urged the European Commission in May to strengthen trade defence tools against Chinese overcapacity. However, Spain subsequently distanced itself from the proposal after Beijing reportedly threatened retaliation, highlighting divisions within the bloc.
Who is Denis Redonnet and what did he signal?
Denis Redonnet is the EU’s chief trade enforcement officer. He indicated last week that the Commission would soon formally propose a new trade instrument to address what he called Beijing’s ‘very, very intense distortions’ of the global economy.
