The European Union and China held trade talks on June 29, 2026, with both sides agreeing to spend three months trying to work out their biggest disagreement: the amount of goods Europe buys from China compared to what China buys from Europe.

The imbalance is real money. In 2025, Europe bought €360.6 billion more in Chinese goods than China bought in European ones. That was a 15% increase from the year before, according to Reuters. For context, that means the gap is getting wider, not smaller — and it's happening while both sides are already arguing about trade.

Why the EU Is Taking Action

The gap matters because European companies are losing ground. Over the past two years, Chinese businesses have become stronger competitors in industries Europe cares about — electric vehicles, solar panels, and chemicals. Even though the two sides have been talking and setting tariffs, the Chinese advantage keeps growing.

Just before these June talks, the European Commission introduced a new law requiring European companies to buy critical materials from multiple countries instead of relying too heavily on China. The idea is not to ban Chinese goods, but to reduce risk by having backup suppliers. Think of it like a company deciding not to buy all its parts from one factory — if that factory has a problem, the whole operation stops.

The law came out a few days before the talks. That timing was intentional. It tells China: "If we can't agree on fairer trade, we will force our own companies to buy elsewhere." It's a negotiating tool without immediately raising tariffs, which can hurt both sides.

The EU also moved ahead with duties on a specific chemical called butanediol (or BDO). Chinese companies can make this chemical cheaply because they have too much capacity and are selling at low prices. This harms European producers who can't compete. The duty is a narrow response to an old problem — one where Europe has been fighting product by product, not just on the big, headline industries like cars and solar.

What Three Months Actually Means

When countries agree to "three months of talks," it does not mean a deal is coming in three months. These talks are more about buying time and letting each side explain itself. Europe has done this before with China. The two sides spent seven years negotiating an investment agreement that neither side ever actually approved — a sign that these structured talks can go nowhere.

The structural reality is this: China exports more than it imports from almost every country, not just Europe. China's own economic plan — to become self-sufficient and export more advanced goods — is not something that gets reworked at a single meeting, no matter what both sides say publicly. Meanwhile, Europe itself is divided. Some member states, like Germany and Hungary, have major business with China and want the Commission to go easy. This makes it harder for Europe to speak with one voice.

The diversification law could shift the balance if it actually passes. It would give European companies a reason to buy from places other than China, simply by requiring it. But the EU's lawmaking process is slow, and large companies with established suppliers in China will fight hard against it in Brussels.

The real test of these three months is whether China will offer anything visible in return — maybe easier access for European banks or insurance companies, or maybe action to reduce the overcapacity in Chinese factories that keeps prices artificially low. If China does not budge, the EU has its backup plan ready: enforce the diversification law and slap more duties on specific products.

The thing both sides cannot ignore is the number itself. A 15% jump in one year, during a period when both sides were already engaged in talks and disputes, is too large to overlook. When the three months end, that number will be what decides what happens next.