State of Global Politics 2025

CWA # 1906
State of Global Politics 2025
China and EU: Trade Frictions, Strategic Dependencies, and Economic Recalibration

The World This Week #338, Vol 7, No 52, 31 December 2025

Femy Francis
31 December 2025
Photo Source:

What happened? 
In 2025, China-EU relations oscillated between de-escalating tensions and taking coercive actions against each other. Europe focused on de-risking from China carefully, without wrecking its ties with its largest trading partner. China focused on retaliatory measures against EU member states to maintain parity.

This year, China and the EU celebrated the 50th anniversary of the establishment of diplomatic ties in 1975. In July, China and the European Union held their 25th China-EU Summit in Beijing. Both countries emphasised the importance of their relationship for the advancement of their shared interests. They discussed the Russia-Ukraine war and urged China not to provide any material support to Russia. On trade, the EU expressed concerns about its large trade deficit with China and called on China to grant European businesses access to its market. The EU also affirmed the One-China policy while expressing concern about rising tensions with Taiwan.

In December, China imposed 42.7 per cent tariffs on EU dairy products as it completed its first phase of anti-subsidy investigation starting in 2024. It found that EU farm subsidies, such as the Common Agricultural Policy, unfairly benefited EU exporters, thereby affecting China's domestic industry. This imposition is in retaliation for the EU’s 2024 EV tariffs against Chinese companies. The tariff will range from 21.9 per cent to 42.7 per cent. The European Commission spokesperson Olog Gill said: “The commission’s assessment is that the investigation is based on questionable allegations and insufficient evidence, and that the measures are therefore unjustified and unwarranted.” This year also saw antidumping duties on Chinese tinplate and European brandy and pork products.

A series of high-level visits was conducted as several European leaders visited China and vice versa. Prime Minister of Portugal, Luís Montenegro, visited in September to discuss economic cooperation between the two countries. King Felipe VI of Spain visited in November on the invitation of China’s President Xi Jinping and to attend the China International Import Expo. German Foreign Minister, Johann Wadephul, held talks with China’s Foreign Minister on the supply chain issue and bilateral trade. French President Emmanuel Macron had a three-day visit to China, where he met Xi and discussed the war in Ukraine and global economic imbalances.

In October, the Dutch Ministry of Economic Affairs announced that it had acquired ownership of the Chinese firm Nexperia. Under this, the Dutch government granted itself the power to intervene in the company’s decision-making, and during this period, Nexperia could not transfer assets or hire executives without the approval of the Dutch government. The government said its actions were based on the shortcomings of the company, which “threaten the continuity and safeguarding of crucial technological knowledge and capacity on Dutch and European soil.” This was soon overturned as China also lifted export control on chips produced by Nexperia.

In April, China’s Ministry of Commerce informed that China and the EU have agreed to kickstart their talks on establishing minimum price commitments on Chinese EVs to provide conditions for fair competition. In December, China’s EV giant BYD signed an agreement with Deutsche Bahn (DB), which is Germany’s largest public transport operator. DB placed an order for 200 pure electric buses as part of their zero-emission bus procurement program and the larger mission to reduce carbon emissions. This deal was heavily criticised by German Finance Minister Lars Klingbeil, who stated that public companies should favour domestic and European manufacturers.

What is the background? 
First, China-EU trade relations. The European Union’s largest trading partner is currently the US, with USD 739 billion worth of trade in 2025, this is followed by China at USD 538 billion and the UK at USD 339 billion. While overall US is still the largest trading partner with most of the EU countries, this year in Germany, China took over with USD 190.7 billion in trade compared to the US’s USD 189 billion. Additionally, there are sectors in which China exports the most in the EU and is the leading supplier of electronics, machinery, automotive parts, and EVs. In 2024, the European Union’s trade deficit with China reached USD 360.02 billion, surpassing USD 349 billion from 2023, which this likely to have ballooned further in 2025.

Second, retaliatory tariffs by China against the EU. The current tariff imposition by China on the EU’s dairy products is not only based on domestic market concerns for China. But it is a retaliation for the EV tariffs of 45.3 per cent imposed by the European Union in 2024. In 2025, the EU imposed tariffs of 66.7 per cent on Chinese imported aerial work platforms, stating that they benefited from government subsidies and lower interest financing. China’s and the EU’s motivation for tariffs differs, as for the former, it is a retaliatory measure to the EU’s actions, and for the latter, it is a protectionist policy aimed at de-risking. 

Third, China dominates the European Union’s EV market. China’s EV giant BYD is set to overtake Tesla sales in the European market in 2025. By the end of November 2025, BYD sold 2.07 million EVs 2025, while Tesla is reckoned to have sold 1.65 million, which is 7.7 per cent less than BYD, reports FactSet data. Schmidt Automotive Research reports that the Chinese EV market share will jump to 11.0 per cent this year, a 9.6 per cent high from 2024, which was only 3.8 per cent. This hike is largely attributable to stringent European regulations and the transition to green energy; here, Chinese firms are providing affordable EVs that are priced lower than those of their European counterparts.

Fourth, Europe’s plan to end its reliance on Chinese rare earths. In 2025, tariff tensions between the US and China affected economies worldwide. Even as a trade truce has been established, the tensions revealed the repercussions of dependence on Chinese rare earths. China’s export control measures on the sale of rare earths created panic, as it is the largest supplier. In light of this, the EU developed a plan to reduce dependence on Chinese raw materials. European Commission President Ursula von der Leyen plans to establish “RESourceEU,” aimed at recycling critical raw materials and stockpiling strategies to protect the EU from any immediate aftershocks.

Fifth, anti-dumping and anti-subsidy investigations by the EU and China. Europe accuses China of dumping excess goods in Europe and expresses concerns about China's overproduction capacity. Stating that this has severely affected their domestic industries, which are unable to compete with Chinese prices. Due to this, a series of anti-dumping duties have been imposed by the EU, the recent being on tinplate, and Chinese duties on European brandy and pork. On both sides, anti-subsidy investigations are currently underway into unfair state subsidies. China's recent tariff on EU dairy products is a result of the completion of the first phase of the investigation.

What does it mean for 2026?
First, continued de-risking by the EU. This coming year, the European Union will focus on strategic de-risking from China in a measured manner. It has realised the importance of China as a trading partner and does not plan to isolate itself from China. Especially when it is transitioning to more green technology, China is a vital partner for the EU. It will focus on establishing protectionist policies for its domestic manufacturers.

Second, partners in green transitioning. China and Europe will increasingly collaborate, as China has evolved into one of the largest suppliers of green technologies, and the EU aims to become the first climate-neutral continent by 2025 as part of the European Green Deal. It wants to cut its greenhouse gas emissions by at least 55 per cent by 2030. China currently dominates the green technology market for manufacturing solar panels, wind turbines, and EVs. This makes both countries strategically significant to each other.

Third, China and the EU to recalibrate ties. The global tariff imposition by US President Donald Trump brought the EU and China closer together again. This has led to cautious re-engagement between the two countries. China has expressed a strong interest in deepening economic cooperation with the EU as it criticises the unilateral actions of the US. The EU is re-engaging with scepticism, where it still wants to de-risk but not decouple. For China, it has become more aggressive in taking retaliatory measures when differences arise.

About the author 
Femy Francis is a Project Associate at NIAS, Bengaluru. 


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The World This Week
August 2025 | CWA # 1779

GP Team

The World This Week#322
US tariffs on India, Brazil and Canada & the EU-US trade deal
This Week in History
August 2025 | CWA # 1778

Lekshmi MK

28 July 1914
Austria-Hungary declares war on Serbia, starting the First World War
Global Politics Explainer
July 2025 | CWA # 1770

Abhiruchi Chowdhury

Pakistan-Afghanistan relations:
Why the focus on terrorism, refugees, and Uzbekistan as the third partner?
The World This Week
July 2025 | CWA # 1769

GP Team

The World This Week#321
Indian PM Modi's visit to the Maldives I Elections to the Upper House in Japan
Global Politics Explainer
July 2025 | CWA # 1762

Lekshmi MK

Ocean Darkening: 
What is the phenomenon? What are its effects? And who are more vulnerable?
Global Politics Explainer
July 2025 | CWA # 1749

R Preetha

Africa as the Hunger Epicenter
Of the 13 Global Hunger Hotspots, 8 are in Africa: Five reasons why
The World This Week
July 2025 | CWA # 1748

GP Team

The World This Week #318
PM Modi’s Visit to Trinidad and Tobago & Ghana, One big beautiful bill, and Quad Foreign Ministers Meeting
Global Politics Explainer
July 2025 | CWA # 1744

Chittrothu Vaihali

EU-Canada Summit 2025
What is security and defence partnership all about?
Conflict Weekly
July 2025 | CWA # 1742

IPRI Team

Conflict Weekly # 287-88
The 12 Day War and the Congo-Rwanda Peace Deal
Global Politics Explainer
July 2025 | CWA # 1738

Fleur Elizabeth Philip

Thailand and Cambodia
What was the phone call between PM Shinawatra and President of Senate Hun Sen? What is the border dispute between the two? Why has this become an issue?
TWTW Note
June 2025 | CWA # 1735

Padmashree Anandhan

NATO Summit 2025:
Trump making Europe great again
The World This Week
June 2025 | CWA # 1734

GP Team

The World This Week #317
NATO Summit 2025 and Russia-Mali bilateral agreements
Global Politics Explainer
June 2025 | CWA # 1733

Ananya Dinesh

China and the Pacific Islands 
What was the recent China-PIC joint statement about? What it says, and what it means?
TWTW Note
June 2025 | CWA # 1728

M Kejia

G7 Summit 2025:
The Focus on the Middle East and Trade negotiations
The World This Week
June 2025 | CWA # 1726

GP Team

The World This Week #316
China-Central Asia Summit in Kazakhstan, and the G7 Summit in Canada
Global Politics Explainer
June 2025 | CWA # 1725

Brighty Ann Sarah, R Preetha, Santhiya M, Aparna A Nair & M Kejia

Operation Midnight Hammer: US bombs three nuclear sites in Iran
What were the three Iranian nuclear sites that were targeted? What are the B2 Bombers and Bunker Buster Bombs? What do these attacks mean? What Next?
Conflict Weekly
June 2025 | CWA # 1724

IPRI Team

Conflict Weekly #286
The Spiralling Israel-Iran Crisis, and the Dangerous Hunger Hotspots
Global Politics Explainer
June 2025 | CWA # 1721

Rizwana Banu S and Santhiya M

Who are the Afrikaners?
Why is Trump interested in the Afrikaner question in South Africa?
Global Politics Explainer
June 2025 | CWA # 1720

Lekshmi MK

New WMO Report on Arctic Warming
What are the social, economic and environmental implications of Arctic warming
Global Politics Explainer
June 2025 | CWA # 1719

J Yamini  

China’s EV Surge
What contributes to the rise of BYD
Global Politics Explainer
June 2025 | CWA # 1717

J Yamini

Gender Violence in Pakistan:
What are the larger issues in the Noor Mukadam case?
TWTW Note
June 2025 | CWA # 1715

Femy Francis

The US-China:
On Tariffs, Rare Earths and Visas
The World This Week
June 2025 | CWA # 1713

GP Team

The World This Week #315
The UN Ocean Conference in France and the US-China Meeting in London
CW Note
June 2025 | CWA # 1712

R Preetha

The World This Week
June 2025 | CWA # 1705

GP Team

The World This Week #314
Elections in South Korea and Poland I China and the Pacific Island Countries I Bangladesh Election Announcement 2026
Global Politics Explainer
June 2025 | CWA # 1703

M Kejia 

Sagarmatha Sambaad in Nepal
Kathmandu’s Global Agenda for the Himalayas
Global Politics Explainer
June 2025 | CWA # 1700

R Preetha

Ethiopia bans the TPLF
What does the TPLF ban mean for the Pretoria agreement? What next for Ethiopia?
TWTW Note
June 2025 | CWA # 1694

Aashish Ganeshan

The US:
Harvard vs Trump Administration
The World This Week
June 2025 | CWA # 1691

GP Team

The World This Week #313
China-ASEAN-GCC Summit I President Macron's visit to South East Asia I Trump Vs Harvard
The World This Week
May 2025 | CWA # 1690

GP Team

The World This Week #312
Elections in Romania, Portugal & Poland I UK-EU Summit
CW Note
May 2025 | CWA # 1689

Padmashree Anandhan

Ukraine
Continuing Russia’s Aerial Attacks, despite exchange of prisoners
CW Note
May 2025 | CWA # 1688

Ayan Datta

Gaza
The Humanitarian Crisis and Israel’s Renewed Offensive
TWTW Note
May 2025 | CWA # 1685

Aparna A Nair

UK-EU Summit:
First step towards a reset
TWTW Note
May 2025 | CWA # 1683

Aashish Ganeshan

Elections in Portugal:
The Rise of Chega Party and the Search for Political Stability
TWTW Note
May 2025 | CWA # 1679

Aashish Ganeshan

US in the Middle Easr
Trump’s visit to Saudi Arabia, Qatar and UAE
TWTW Note
May 2025 | CWA # 1678

Gauri Gupta

China in Latin America
China-CELAC forum: Strengthening ties with Latin America and Caribbean
The World This Week
May 2025 | CWA # 1677

GP Team

The World This Week #310-311
China in Latin America and the Carribbean I Trump's Middle East Visit I Denmark as the new Arctic Chair
CW Note
May 2025 | CWA # 1675

Lekshmi MK

Turkey:
PKK disbands after 40 years of armed insurgency
CW Note
May 2025 | CWA # 1673

Padmashree Anandhan

Ukraine:
The Discussion in Turkiye and the Elusive Ceasefire
CW Note
May 2025 | CWA # 1671

Abhiruchi Chowdhury

US, Ukraine and Russia:
Air attacks amidst a Minerals deal and Ceasefire Proposals
Global Politics Early Bird
May 2025 | CWA # 1670

Fleur Elizabeth Philip

Singapore Elections in 2025:
People’s Action Party (PAP) Wins, Again
TWTW Note
May 2025 | CWA # 1667

R Preetha and Brighty Ann Sarah

East Asia:
Tough Tariff Negotiations with the US
TWTW Note
May 2025 | CWA # 1666

Padmashree Anandhan

The US-Ukraine
The mineral deal with the US
Conflict Weekly
May 2025 | CWA # 1665
Conflict Weekly # 280-81
India-Pakistan De-escalation I Ukraine Discussion in Istanbul I The Battle over Port Sudan I Disbanding of PKK in Turkiye I France-Algeria Diplomatic Tensions
Global Politics Early Bird
May 2025 | CWA # 1663

R Preetha

Canada Elections 2025:
What do the results convey? What next for Mark Carney?
Conflict Weekly 250th Issue
October 2024 | CWA # 1480

IPRI Team

This Week in History
July 2024 | CWA # 1413

Ramya B

Global Politics Early Bird
May 2024 | CWA # 1336

Femy Francis

This Week in History
April 2024 | CWA # 1275

Ramya B

NIAS Global Politics Database
March 2024 | CWA # 1251

NIAS Africa Team

Africa This Week
This Week in History
March 2024 | CWA # 1246

Sivasubramanian K

NIAS Global Politics Database
February 2024 | CWA # 1226

NIAS Africa Team

Africa This Week
The World This Week
November 2023 | CWA # 1148

GP Team

The War in Ukraine
October 2023 | CWA # 1091

Annem Naga Bindhu Madhuri

Issues for Europe
NIAS Pakistan Weekly
October 2023 | CWA # 1087

PR Team

The World This Week
October 2023 | CWA # 1083

GP Team

Conflict Weekly
August 2023 | CWA # 1049

IPRI Team

IPRI Quarterly Forecasts I Triggers, Trends, and Trajectories
July 2023 | CWA # 1012

Bibhu Prasad Routray

Myanmar continues to burn
The World This Week
July 2023 | CWA # 1009

GP Team

2022: The World This Year
December 2022 | CWA # 879

Padmashree Anandhan

The Ukraine War
2022: The World This Year
December 2022 | CWA # 872

Sapna Elsa Abraham

Europe: Heatwaves, Wildfires, Droughts, and Ice Melt in Alps
November 2022 | CWA # 838

Rishma Banerjee

Tracing Europe's droughts
NIAS Africa Weekly
March 2022 | CWA # 705

NIAS Africa Team

In Focus: Libya
The World This Week: 150th Issue
December 2021 | CWA # 630

GP Team

Europe in 2021
Pakistan Reader
October 2021 | CWA # 588

Abigail Miriam Fernandez

TLP is back again
NIAS Fortnightly on Science, Technology & International Relations
August 2021 | CWA # 528

STIR Team

Space Tourism
GLOBAL PROTEST MOVEMENTS
September 2020 | CWA # 337

Anju Annie Mammen

The FATF Meeting, February 2020
February 2020 | CWA # 235

Lakshmi V Menon

Science, Technology and International Relations
September 2019 | CWA # 162

Lakshman Chakravarthy N

5G: A Primer
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 71

Mahesh Bhatta

Nepal
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 70

Nasima Khatoon

The Maldives
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 69

Harini Madhusudan

India
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 68

Sourina Bej

Bangladesh
South Asia Monthly Brief (Nov 2018)
December 2018 | CWA # 67

Seetha Lakshmi Dinesh Iyer

Afghanistan
United States
July 2018 | CWA # 47

Rahul Arockiaraj

East Asia
June 2018 | CWA # 26

Siddhatti Mehta