EU-China trade deficit reaches €36.5 billion in July, Merics finds

Hybrid car imports from China grew tenfold since October 2024

The EU’s trade deficit with China reached €36.5 billion in July 2026 — more than €1 billion every day that month — according to an analysis published Tuesday by the Berlin-based Mercator Institute for China Studies (Merics).

The figure, drawn from Chinese customs data, marks an increase from €32.2 billion in July 2025. For the first seven months of 2026, the cumulative EU deficit with China stood at €234 billion, roughly €21 billion higher than the same period in 2025.

Merics put the ratio of EU imports from China to exports at 3.10 to 1 in July, meaning the EU purchased more than three euros’ worth of Chinese goods for every euro of EU goods sold to China. “The problem is no longer simply that the EU is buying more Chinese goods. China is selling more to Europe while buying less from it,” Merics said.

The report comes as the EU and China remain locked in talks aimed at averting a trade war. Šefčovič, the EU’s trade commissioner, is scheduled to travel to Beijing on October 8 to meet with his Chinese counterpart. “With the bilateral deficit now exceeding €1bn a day, the widening imbalance will almost certainly be high on the agenda at the planned EU-China meeting in October,” Merics said.

Sources in Brussels told The Guardian that one measure under consideration is introducing quotas on hybrid vehicles and certain types of chemicals imported from China. The Financial Times reported last week that the EU has asked China to voluntarily reduce hybrid-car exports, which surged after the bloc imposed extra tariffs beyond the standard 10 percent levy applied to third-country car imports.

Merics data showed imports of non-plug-in hybrid vehicles from China grew tenfold, from just under 4,000 vehicles in October 2024 to 50,000 in July 2026.

EU Commission President Ursula von der Leyen has said the trade imbalance must be arrested. China has repeatedly warned it is prepared for a trade war, though its commerce ministry maintained a diplomatic tone ahead of the October meeting. “Any solution between China and the EU must ensure a balance of interests, comply with World Trade Organization rules and the respective domestic laws of every side, and fully take into account the interests of industries on both sides,” the Chinese commerce ministry said last week.

Chinese exports will also figure prominently at Thursday’s summit between Xi and Trump in Washington. Expectations center on a 12-month extension of a suspension of Beijing’s rare-earth export restrictions, which China introduced in April 2025 and which nearly brought the automotive industry in the EU, Mexico, the United States and the United Kingdom to a halt amid shortages of permanent magnets. China suspended the restrictions last October when Trump and Xi met in South Korea but offered no further concessions at their most recent meeting, in May in Beijing.

Kurt Tong, the former U.S. consul general to Hong Kong and now managing director of the Asia Group strategic advisory firm, said a reprieve could be announced at this week’s summit, or at the Asia-Pacific Economic Cooperation summit next month if it is not.