When Maroš Šefčovič set out his strategy for engaging with China to European Union ambassadors in July, he had a warning for governments urging tougher action on trade against Beijing.

“Sometimes, it’s even popular to start a trade war, but it’s very difficult to finish it,” the EU trade chief recalled later in an interview with POLITICO.

Three months on, Šefčovič has secured a first breakthrough, reaching a deal in Beijing last week to sharply reduce imports of Chinese hybrid cars. The symbolic win marks a small step toward stabilizing a trading relationship that Brussels believes has reached a dangerous tipping point.

The agreement, which will initially cap imports at 350,000 vehicles a year, marks a significant concession from Beijing, whose carmakers have been flooding the European market with increasingly competitive vehicles. 

For Šefčovič, who negotiated last year’s tariff truce with Donald Trump, the agreement suggests his strategy of engagement backed by the threat of tougher trade measures may be starting to pay off.

Šefčovič agreed to launch the trade dialogue at a meeting with Chinese Commerce Minister Wang Wentao in Brussels in late June.

By focusing initially on cars — an area where the EU has leverage as one of the few major markets still open to Chinese manufacturers — the Slovak commissioner hoped to secure a confidence-building win before tackling thornier questions, from critical raw materials to China’s vast industrial overcapacity.

At the same time, he worked to coalesce European governments behind a parallel effort to strengthen the bloc’s trade defenses, reinforcing his negotiating position with the threat of tougher action to bring down the EU’s €1 billion-a-day trade deficit with China.

The hybrid deal, however, is only the opening move in a much bigger contest.

EU leaders meet in Brussels on Thursday to take stock, weighing the benefits of continued engagement against demands for more aggressive action to protect European industry from a surge in Chinese imports.

The meeting will test whether a commissioner who has made a career of finding compromises with difficult partners can maintain Europe’s support for a strategy whose success is far from assured.

“You have to deal with the same partner across the table,” Šefčovič said of the risks of starting a trade war, in the interview with POLITICO in August. “So if you can avoid this, it would be much better.”

Market power

Šefčovič’s opening move was to focus on an area where Europe still has leverage: access to its market of 450 million people.

China’s fiercely competitive manufacturers have become global powerhouses, but they are struggling with weak demand at home. A prolonged property slump has weighed on consumer spending, while cutthroat competition has triggered price wars. Domestic sales of passenger vehicles fell 28% in September from a year earlier.

That makes overseas markets increasingly important. With the U.S. shutting out Chinese imports, Europe remains one of the most lucrative markets still open to Chinese manufacturers.

Šefčovič gambled that Beijing would prefer to accept limits on exports rather than risk losing access to the European market altogether.

He set his sights on the automotive sector, where Chinese manufacturers have been making rapid inroads. Chinese carmakers accounted for just 2% of both the European hybrid and plug-in hybrid markets in 2024; by the first half of 2026, their respective shares had risen to 14% and 25%, industry figures show.

The Commission was preparing to restrict hybrid imports even without an agreement. But a negotiated settlement also offered Šefčovič something valuable politically: evidence that engagement with Beijing could deliver tangible results.

The negotiations were intense, according to a person familiar with the talks on the Chinese side.

“It was very, very tough,” the person said, speaking on condition of anonymity to discuss the closed-door negotiations. “Both sides hadn’t seen such intensity in a long time. No summer break, no holidays. They worked around the clock even one, two days prior to Šefčovič’s trip to Beijing.”

While pursuing dialogue, Brussels also wanted to convince Beijing that it was prepared to take tougher action if the negotiations failed.

Šefčovič had earlier flagged plans for a new “diversification instrument” that would require businesses in critical sectors to source essential inputs from at least three suppliers — a move to reduce China’s ability to exploit Europe’s dependence on its critical raw materials.

Then, just three days before Šefčovič’s trip to Beijing, France and Germany raised the stakes.

President Emmanuel Macron and German Chancellor Friedrich Merz called for a powerful new trade weapon that would allow Brussels to restrict — or even shut off — access to the European market within days for countries deemed to have severely distorted the bloc’s single market.

The proposal did not explicitly name China, but Beijing was its obvious target. 

Keeping it together

EU leaders are expected to welcome the agreement but also press the Commission to act quickly to strengthen the bloc’s trade defenses, according to several diplomats. The understanding reached in Beijing has bought time, but hasn’t settled how far Brussels should go if Chinese exports keep rising or negotiations stall.

“We’re losing thousands of jobs in industry; olive oil and ice cream won’t solve the core issue,” said one EU diplomat after Šefčovič briefed ambassadors on Sunday, referring to reported deliverables from the talks.

A senior German official welcomed the Beijing deal as a first step in the right direction. “It’s a positive sign — which, of course, doesn’t fully solve the problem of the trade deficit with China,” the official said.

But Berlin’s support for a tougher line might prove short-lived.

Alicia García-Herrero, a senior fellow at the Bruegel think tank, argued that Beijing’s concessions had been calculated to assuage Berlin, given the importance of the automotive industry to the German economy.

“I’m just hoping Merz doesn’t turn away from the letter he sent to the Commission,” she said. With the German chancellor politically weakened at home, García-Herrero fears he may be reluctant to risk a prolonged confrontation: “I worry Merz will take this quick win and run.”

That leaves Šefčovič facing a balancing act: keeping EU governments on board with continued engagement with China while maintaining a credible threat of tougher action if the talks break down. 

“I expect [leaders] to give the Commission a nod to move ahead with other trade defense measures. China may see this as a betrayal. If that is the case, we could return to conflict very quickly,” said Noah Barkin, a senior adviser at the Rhodium Group’s China practice.

The battle ahead

For Šefčovič, the challenge now is to turn a limited breakthrough on cars into a broader rebalancing of trade with China — while buying Europe time to strengthen its defenses should the negotiations fail.

“There is an argument for doing to China what China had done to Europe for years — bogging Beijing down in dialogue and process while Europe gets its tools in place. But the EU needs to make full use of the time that these talks provide,” said Rhodium’s Barkin. 

The trade chief is expected to hold a video call with Wang in January, before the two meet again next March. Those talks will test whether Beijing is prepared to make further concessions in sectors where European industry is increasingly on the defensive, including chemicals.

Another priority is critical raw materials, where China has agreed to continue issuing export licenses for rare earths. Beijing’s grip on their supply gives it considerable leverage over European manufacturers, underscoring the limits of Šefčovič’s negotiating position.

The Commission is also preparing two proposals for December: the diversification instrument, aimed at reducing dependence on Chinese supplies, and a mechanism to shield European industries and regions from retaliation.

The scale of the challenge is daunting. Chinese hybrid imports were worth €6.7 billion in the first half of 2026, against an EU-China trade deficit of €360 billion last year. The agreement offers some relief to European automakers but does little to address the underlying imbalance.

Brussels hopes the hybrid safeguard can serve as a blueprint for protecting other industries facing a surge in Chinese imports.

“We hear our industry. That includes the chemical industry, the wind industry, the furniture industry. We know where there’s a surge, and we know what hits the hardest in terms of our deindustrialization,” a senior Commission official said on Monday.

Šefčovič acknowledged the limits of dialogue in his August interview, warning that negotiations would become harder to sustain without tangible progress.

“What would be very important is to come back to say there is acknowledgment of the issue and there are already some pilot schemes which we want to test and to see if they are working,” he said.

“But if simply there will be no action, then of course it will be much more difficult for us just to talk about these issues.”

Jordyn Dahl in Brussels and Hans von der Burchard in Berlin contributed reporting. 

BRUSSELS — The European Commission announced a new list of 46 projects Friday in a bid to diversify away from China’s grip on raw materials and establish its own mineral sovereignty.

The projects span extraction, processing, recycling, and substitution for raw materials to supply the EU’s defense, automotive, clean tech and technology industries.

Many of the projects are designed to support electrification and the battery value chain. Lithium, nickel, cobalt, manganese and graphite — the five key battery metals used in electric vehicles and grid-scale batteries — dominate the list. Copper and aluminum, conductors that are used in anything involving electricity, also figure prominently.

Through these projects, Brussels wants to meet its targets under the Critical Raw Materials Act, which, by 2030, the bloc aims to mine at least 10%, process 40% and recycle 25% of its own needs, while sourcing no more than 65% of any one material at any processing stage from a single non-EU country.

The list covers 15 of the 17 “strategic minerals” under the act, which the bloc needs to deliver these targets on each one.

Friday’s announcement is the second batch of strategic projects listed under the act, after the EU rolled out its first list in March 2025, featuring 47 projects and 13 non-EU country projects. The majority of those projects are behind schedule however, highlighting the complexity of getting critical mineral projects up and running.

“With the projects selected in 2025 and 2026, we could now fully meet our European extraction target for lithium, nickel, rare earths, magnesium and tungsten,” said the bloc’s industry chief, Stéphane Séjourné. “We could also meet our processing target for lithium and rare earths. And our recycling target for lithium, cobalt and rare earths.”

With over 170 applications received, the 46 projects span 16 EU member countries: Belgium, Bulgaria, Estonia, Finland, France, Germany, Greece, Italy, Lithuania, the Netherlands, Poland, Portugal, Slovakia, Spain, Romania and Sweden.

“Exactly one year ago, we experienced firsthand why this matters. On Oct. 9, 2025, China announced new export restrictions on rare earths,” said Séjourné. Those export controls are due to expire in January.

The “strategic project” label is meant to provide faster permitting and help secure public and private finance, with permitting deadlines of 27 months for mines and 15 months for processing and recycling projects.

The Commission will also announce strategic projects in non-EU countries later this year.

BRUSSELS — It was meant to be Europe’s escape from the web of Chinese critical mineral supremacy.

But two years after it took effect, the EU’s Critical Raw Materials Act is not on schedule. Just one in four critical mineral projects granted special status under the law is on track to be ready on time, according to new analysis shared with POLITICO.

On Friday, EU industry chief Stéphane Séjourné will unveil a new list of critical mineral projects that will receive privileged access to funding, accelerated permitting and help from Brussels to find buyers.

The idea is to make Europe a major producer of materials essential to clean energy, tech, and defense manufacturing. It’s currently a heavy importer.

But progress on the first round of 47 projects, announced early last year, offers little hope for the bloc’s ambitions.

“At least one in three mining and processing strategic projects is either late, stalled, at risk, or no longer exists, and only about a quarter are clearly on track,” said Diego Marin, policy officer for raw materials at the European Environmental Bureau, citing publicly available sources. The findings will be published in a report later this month.

Financial, regulatory, and political hurdles are blocking European mining projects, the industry says, despite the Critical Raw Materials Act’s aim to speed up the time it takes to get the shovels in the ground.

The EEB’s findings were echoed in an industry call in August, where 23 projects named in the first round claimed some were facing “immediate jeopardy,” in a letter sent to the Commission and obtained by POLITICO.

Those same companies also believe that announcing more strategic projects will create more problems. However, a Commission official dismissed that claim, saying that some of those projects had received direct funding from the Commission, and claiming the companies believe new projects would “dilute their status.”

The EU unveiled 47 projects in March 2025, covering 14 of the bloc’s 17 designated strategic raw materials—from lithium, nickel, cobalt and graphite for electric vehicle batteries and rare earths for magnets used in wind turbines, to tungsten for military equipment and gallium for semiconductors. It also includes 13 projects from outside the bloc.

These were designed to deliver the EU’s raw materials targets: by 2030, the bloc aims to mine at least 10 percent, process 40 percent and recycle 25 percent of its own needs, while sourcing no more than 65 percent of any one material at any processing stage from a single non-EU country.

Breaking Europe’s dependence on China for key metals is at the heart of the policy, a goal European Commission President Ursula von der Leyen highlighted in her State of the Union speech last month. “We are more than 80% dependent on China for many critical raw materials [and] 90% for some rare earths,” she lamented. 

A Commission official said that if all goes to plan, the EU will meet its 2030 goals for lithium, cobalt and rare earths, but results for other materials are mixed, with shortfalls in nickel processing and recycling and across the manganese supply chain. They did not give hard figures, though.

Industry skeptical

“Unless something happens that is absolutely not foreseen today, we will be far, far away from reaching the targets, even if they are quite low,” said Jan Moström, former CEO of Swedish mining giant LKAB and outgoing president of Euromines. He said better access to financing and faster permitting was key.

The EU is under additional time pressure as a pause on China’s export controls on rare earth minerals is due to expire in January.

Global think tank ODI found in June that “out of 60 projects, 14 are unlikely to contribute by 2030 because their estimated start of production falls between 2029 and 2031,” and that “three out of four are either behind their expected schedule or impossible to verify using up-to-date public evidence” — backing up the EEB’s numbers. 

A European Court of Auditors report this year also revealed that “many projects will struggle to secure supply for the EU by 2030” and that there was “no proper tracking of results.” 

The European Commission questioned the current validity of the ECA’s findings, saying it “audited a period of policy that does not cover everything we’ve done since this mandate. So the Court of Auditors had very relevant points that we took into account in our policy, but should absolutely not be seen as a fair assessment of the work we’ve done with the von der Leyen Commission number two,” said a Commission official. 

Desperate times

Since adopting the Critical Raw Materials Act in 2024, Brussels has rolled out a flurry of initiatives to get projects moving. They include a proposed critical raw materials center, for which Parliament is seeking €2 billion; the “RESourceEU” plan that’s mobilized more than €2 billion; a mechanism to identify suppliers; and plans to revise water rules and speed up environmental impact assessments. 

But industry leaders say the EU is moving too slowly. 

“I’m still to be convinced that it makes any difference,” Michael Staffas, CEO of Swedish miner Boliden, told POLITICO when asked about the benefits of being designated as a strategic project. Boliden’s subsidiary Somincor was granted strategic status for a copper and zinc mine in Portugal. 

The “strategic project” label promised faster permitting and help securing public and private finance, with permitting deadlines of 27 months for mines and 15 months for processing and recycling projects.

“In Sweden you have different authorities that can basically object to a permit process and that in itself creates way longer time than 27 months, just the legislation,” said LKAB CEO Johan Menckel, whose company currently has three strategic projects.

One is the Per Geijer deposit, home to Europe’s largest rare-earth deposits, which the local indigenous Sámi community opposes, arguing it would harm their reindeer-herding tradition. 

The local administration recently recommended that the State Mining Authority grant the concession on the condition that the Swedish company “minimize the impact on the reindeer industry,” but that will be subject to appeal from the Sámi.

Karin K Niia, a Sámi reindeer herder, said in comments that the EU will be complicit in cultural genocide if the project goes ahead. 

Europe’s lithium hope

Europe’s biggest bet to escape China’s foothold in battery metal supply chains is the Barroso lithium mine in Portugal, run by UK-based mining company Savannah Resources. The company says the mine could supply enough lithium for around half a million electric-vehicle batteries a year.

“I don’t think the strategic project stamp and the [Critical Raw Materials Act] have been absolutely essential, but it wasn’t also supposed to be. It was supposed to, in my understanding, be important to set a framework under which Europe can do the right thing faster, better, and for the better benefit of the next generation of Europe,” Savannah’s CEO Emanuel Proença said, calling it just another piece of a very big puzzle. 

Europe’s lithium-refining ambitions are also faltering: France’s Viridian Lithium went bankrupt after failing to secure funding, while Portugal’s José de Mello Group was unable to finance its planned €492 million refinery — despite both projects winning strategic status in the EU’s first round.

Viridian Lithium spokesperson Luc Pez said the strategic project label was a ‘curse.’ 

Rio Tinto’s Jadar project in Serbia, one of the non-EU projects to gain strategic-project status, was meant to provide double Barroso’s lithium capacity and cater to up to 25 percent of Europe’s demand. That, however, was suspended because of permitting issues and became a widely protested project amid allegations of corruption and environmental concerns. 

That reflected the simple fact that people don’t like mines in their backyard — an obstacle for mining projects worldwide, but especially in Europe, which is densely populated and has strong civil society.

“These projects had strategic status, EU money and fast-track permits, and it still wasn’t enough,” said EEB’s Marin. “If the supply push can’t deliver even under those conditions, the EU has to take demand reduction and sufficiency seriously. We can’t permit our way out of a market problem.”

Frida Preuß contributed to this report.

BRUSSELS — European Trade Commissioner Maroš Šefčovič opened two days of talks in Beijing on Thursday aimed at rebalancing a gaping trade deficit, with failure to reach a deal likely to test Brussels’ resolve to impose tougher trade restrictions.

The meeting marks the final round of an effort launched in June to reset the lopsided trading relationship, and will hinge on whether China’s Commerce Minister Wang Wentao is prepared to make substantial concessions.

If no agreement can be reached to narrow the EU’s €1 billion-a-day goods trade deficit, Brussels and Beijing could find themselves on a collision course. EU leaders will review the outcome of the talks at a summit in Brussels next Thursday, where they will consider next steps.

Arriving in China, Šefčovič said his goal was to balance what he called an unsustainable trade deficit. Heading into a meeting with Wang, he said it was crucial that the talks deliver “tangible outcomes.”

The discussions have zeroed in on cars, with Chinese exports increasingly eating into the market share of European automakers. In August, one in eight cars bought in the bloc was Chinese, thanks largely to a boom in sales of plug-in hybrid electric vehicles.

European negotiators have been pushing China to commit to some form of export restraint — in particular for hybrids. Unlike Chinese-made battery-electric vehicles, which were hit with extra countervailing duties in 2024, plug-in hybrids are not subject to such measures.

Without meaningful commitments from Beijing, the Commission has warned it will resort to unilateral trade restrictions. For cars, it is considering safeguard measures that would mix import quotas and tariffs to protect European automakers.

Chemicals are next. Industry Commissioner Stéphane Séjourné said Thursday that the Commission plans to introduce targeted safeguards on plastics and composite materials, subject to a request from EU governments that Brussels do so.

Wind in his sails 

Šefčovič flew to Beijing with the backing of the leaders of Europe’s two biggest economies — France and Germany — to take a tougher approach to trade.

In a joint appeal on Monday, President Emmanuel Macron and Chancellor Friedrich Merz said the Commission should be given a freer hand to shut off access to the EU for goods from countries that distort the bloc’s single market.

While the two leaders did not mention China in their letter to Commission President Ursula von der Leyen, there was no mistaking the target of their proposed trade “kill switch,” which could be blocked only by a qualified majority of EU countries.

The EU already has a powerful trade weapon in its Anti-Coercion Instrument, designed to counter economic bullying by foreign powers. 

But Brussels has yet to muster broad support from member countries to deploy it, most recently in January when U.S. President Donald Trump threatened to seize Greenland, a Danish territory.

The EU’s difficulty in responding swiftly to trade threats has heightened concerns about a surge in Chinese exports that European officials say benefit from unfair government subsidies. With Trump hiking U.S. tariffs, ever more Chinese exports are heading to Europe — increasing pressure on industries that are already being forced to retrench.

Europe’s heavy dependence on China for processed rare earths and other critical raw materials also leaves it vulnerable to retaliation should relations deteriorate.

“If we aren’t willing to fix the way our model works, then we’ll be destroyed,” said one EU diplomat, summing up the concerns flooding Brussels.

“What’s the point of having [more tools] if the Chinese can shut down our strategic production in a matter of days?”

Low expectations

Although Šefčovič entered the talks strengthened by the Franco-German letter, a second diplomat said they didn’t foresee a deal with Beijing this week.

“He knows that a lot of member states are behind the Franco-German push,” the diplomat said, adding that this “has been seen in China.” 

But Beijing has little room to compromise, given its reliance on exports to sustain growth amid weak domestic demand and a prolonged property slump.

“The Chinese side is starting to recognize that there is a problem. But I don’t think they are ready to enter into a substantial deal,” said Gunnar Wiegand, a former head of the EU diplomatic service’s Asia-Pacific department.

Wiegand, now a visiting fellow at the German Marshall Fund, said Šefčovič had earned a reputation as a dealmaker in talks on Britain’s exit from the EU and in last year’s trade deal with Trump. This time, however, “both sides are bound by their own circumstances,” he said.

Europe is desperate to halt the erosion of its industrial base, while China remains heavily dependent on exports to sustain economic growth. 

“The Chinese are going to object to being singled out. Even if a deal with the EU would be the most rational solution, other important markets for Chinese exports, such as ASEAN countries, will start asking the same. It will undercut their global market,” he said.