Brussels

As a wave of cheap Chinese imports has flooded the EU in recent years, Brussels is now facing a new challenge: new import routes passing through Morocco and Turkey, the EU’s neighbouring countries, where Beijing can leverage tariff-free trade agreements with the bloc.

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By investing heavily in those countries, China is seeking to circumvent the EU’s trade barriers, including the extra duties imposed by the EU on products such as electric vehicles, and channel its industrial overcapacity into the European market.

European policymakers are now bracing for a surge in low-cost Chinese goods entering duty-free through these gateway countries, thanks to an association agreement that liberalises trade with Morocco and a customs union linking Turkey to the EU.

The European Commission launched negotiations with Beijing in June in a bid to rebalance a trade relationship that has left the EU with a €1 billion deficit. However, it is not guaranteed to reach concrete results by October — the deadline set by Trade Commissioner Maroš Šefčovič.

Brussels has already made clear it is prepared to deploy new unilateral trade defence measures. But Beijing is becoming increasingly adept at getting around the EU’s traditional trade tools, particularly trade defence tariffs.

Its circumvention strategy is now to go through Morocco and Turkey, which are becoming the new front line in the EU’s trade battle with China.

Billions in investments

Over the last four years, these investments have reached a record $6 billion in Morocco and $2 billion in Turkey, according to Rhodium Group, an independent research provider.

Cairo is also attracting Chinese money, with $6 billion invested in 2025 alone. But Chinese products made in Egypt are mainly exported to the US and Gulf countries.

In Morocco, Beijing has been investing in an entire electric vehicles (EV) manufacturing ecosystem. “There is a genuine long-term trend that began after COVID-19. We are seeing Chinese companies setting up operations in the country to manufacture high-value-added goods,” Armand Meyer, an expert at Rhodium Group, told Euronews.

Chinese battery producer Gotion is settling in the country, along with BTR, Tinci and Huayou, which produce battery materials, APG, an automotive brake manufacturer, and Sentury Tire, a tyre maker. All will soon have factories in Morocco.

The EU, which hit Chinese EVs with anti-subsidy duties in 2024, is concerned about China’s move into neighbouring countries.

In Turkey, part of the investment targets the local market, while Chinese export plans also threaten European producers. China’s EV giant BYD was granted preferential access to the Turkish market to build a factory, although the project has been suspended for now.

“The idea was to build a mega-factory in exchange for an exemption from Turkish import duties, as Turkey imposes tariffs on Chinese electric vehicles,” Meyer said. Chinese home appliance maker Haier is also investing in the country, as is Astronergy, which manufactures solar panels.

China’s manufacturing push in those countries spans multiple sectors, exploiting trade agreements with the EU that cover a wide range of products.

“The free trade agreements with Morocco and Turkey cover almost all goods. So it’s complicated to counter the Chinese export strategy,” Thomas Grjebine, an economist at the French Centre for Research and Expertise on the World Economy, told Euronews.

Grjebine added that China has understood these countries can serve as “a staging ground”, with investments rising year after year.

“Investments in these gateway countries account for about a quarter of China’s total investment in Europe and the Maghreb,” he said.

Reducing Morocco and Turkey’s access to the EU market

However, in March, the Commission proposed a landmark bill called the Industrial Accelerator Act (IAA) which aims to protect the EU market from foreign competitors — provoking anger from China.

The IAA creates a European preference for access to public procurement and EU public funding schemes, ruling out non-EU countries under certain conditions. China was targeted in particular, leading to threats of retaliation from Beijing.

All foreign countries are now lobbying EU lawmakers, who are discussing the bill, to be considered trusted partners, allowing their products to qualify as “Made in Europe”.

Industries with parts of their value chains outside the EU are also urging MEPs to include those countries. Euronews has learnt that ACEA, for instance, which represents European carmakers in Brussels, has been lobbying EU lawmakers to include Morocco, where many European manufacturers have production plants.

Paradoxically, if Morocco and Turkey — where European carmakers are also established — were considered trusted partners whose products could be labelled “Made in Europe”, it would also serve Beijing’s interests — despite fierce competition with the EU in the automotive sector — as China is building factories there.

“The Chinese know full well that a number of companies have located part of their value chain in those countries and are lobbying hard to ensure that Morocco and Turkey are not excluded from what is considered ‘Made in Europe’,” French socialist MEP Pierre Jouvet told Euronews.

“This is part of Beijing’s investment and tariff circumvention strategy,” he said.

The MEP is campaigning to exclude Morocco and Turkey from the scope of the IAA unless both countries open their public procurement markets to EU companies.

That position is backed by French liberal MEP Christophe Grudler and German Green MEP Anna Cavazzini, who, along with Jouvet, are expected to present a report on the issue to fellow MEPs in September.

EU trade defence instruments lack effectiveness

Without such a bill, the EU’s trade defence instruments remain modest compared with the scale of the coming wave of cheap Chinese products manufactured in those neighbouring countries.

The EU can only tackle Chinese dumping — where a product is sold below its normal value — on a product-by-product basis, as well as tariff circumvention when parts of the goods come from China and have only been assembled in Morocco or Turkey. The Commission usually assesses the value added generated in those countries before deciding whether to sanction Chinese companies with duties.

“For years, it was mostly a matter of transhipment through these countries, with Chinese exporters simply changing the certificate of origin, but defending the EU market has now become far more challenging,” Laurent Ruessmann, partner at law firm RB Legal, told Euronews.

Ruessmann has represented European glass fibre producers — whose products are used as reinforcement materials — in their fight against cheap Chinese imports. Eventually, glass fibre from China and from Chinese companies located in Egypt was hit with EU anti-dumping and anti-subsidy duties in 2020.

But the Commission then had to open new cases involving glass fibre fabrics — used in wind turbine blades — imported from Morocco and Turkey. In 2022, it found that they were made using Chinese glass fibre already subject to EU anti-dumping duties imposed in 2020, a textbook case of tariff circumvention.

More recently, in 2025, the Commission also slapped countervailing duties on aluminium road wheels made in Morocco after concluding China had unfairly subsidised them.

According to the Organisation for Economic Co-operation and Development (OECD), Chinese companies receive up to eight times more subsidies than Western firms.

With recent investments in Morocco and Turkey, the EU executive is facing a new challenge: Chinese companies are setting up factories abroad, generating more added value in those countries than in China.

“In those cases, the Commission can no longer rely on anti-circumvention rules and has to launch a fresh investigation. The challenge is that it is much more difficult to prove dumping or unfair subsidies, making it far harder to impose duties high enough to protect the European market,” Victor Crochet of law firm Nishimura & Asahi told Euronews.

Looking at recent judgments by the Court of Justice of the European Union, however, the lawyer believes EU judges will progressively allow the Commission to be “more aggressive” towards Chinese operations located in the EU’s neighbouring countries.

“The Commission will have to come up with new instruments. It will try to push the boundaries of the concept of circumvention to keep pace with the times, even when the raw materials no longer come from China,” Crochet said.

EU accuses US tech giant of favouring its own services in search results, as Trump lashes out against bloc.

United States President Donald Trump has threatened the European Union with steep tariffs and a new trade investigation, saying that the bloc “will pay a very big price” after Brussels fined Google $1bn over antitrust violations.

Trump called penalties against Google and other US tech firms “highly unethical”, saying on Friday that the US “is not a ‘PIGGYBANK’ for Europe”.

“This illegal and highly discriminatory practice started at these high levels during the first year of the Sleepy Joe Biden Administration, but it’s not going to continue during the Trump Administration,” he wrote in a social media post.

The European Commission had imposed the fine on Thursday, ruling that Google had breached the bloc’s Digital Markets Act by favouring its own services in search results and restricting app developers from directing users elsewhere.

The penalty adds renewed strain to US-EU relations at a moment when trade tensions between Washington and Brussels had appeared to ease.

Regulators said Google gave preferential placement to its own shopping, travel and other services over rival offerings, and blocked app developers from steering customers towards deals outside its Play Store.

The EU Commission split the penalty roughly in half between the two breaches, giving Google 60 days to change its practices or face periodic fines of up to 5 percent of its average daily turnover.

Teresa Ribera, the commission’s executive vice president overseeing competition policy, on Thursday called the action “decisive yet balanced”, arguing that products should succeed on merit rather than ownership.

Kent Walker, a Google executive, described the ruling as “product degradation” driven by a small number of complainants, insisting that regulation should improve products rather than weaken them.

The EU has fined Google repeatedly since 2017, including a $4.5bn penalty over its Android operating system, upheld on appeal this month, and a $3.4bn fine last year targeting its advertising business.

The latest penalty also reignites friction with Washington.

Jamieson Greer, the US trade representative, warned this week that Brussels’s approach towards American tech firms risks unravelling a trade deal struck in Turnberry, Scotland, last year that capped US tariffs on European goods.

EU officials have pushed back, insisting they answer to their own laws rather than outside pressure.

Trump threatened to launch a probe under Section 301, a US tool for probing unfair trade practices, but the move could take months to produce results, though tariffs could follow far sooner.

Published on
14/07/2026 – 13:50 GMT+2

Deputy Director-General for Trade at the European Commission Denis Redonnet told MEPs on Tuesday that the EU will step up measures against Chinese imports before the October deadline it set to protect the bloc’s market from Chinese overcapacity.

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The warning comes as Brussels started negotiations with Beijing last month to reduce its record-high €1 billion-a-day trade deficit with China, setting an October deadline for the two sides to make significant progress.

However, tensions remain high between the two trading partners, as Beijing has repeatedly threatened retaliation if the EU adopts measures closing its market to Chinese exports.

“Dialogue alone will not suffice,” Redonnet told EU lawmakers, adding that the EU needs to decide how “to protect and preserve the European industrial base.”

“We need to look at what the Chinese do. It is more than likely that we’ll have unilateral protection measures adopted atthe European Union level. So we’ll be taking various measures in parallel.”

The EU is fighting low-cost Chinese imports flooding its market and threatening its manufacturing industry in key sectors such as steel, chemicals, machine tools and electronics.

“What can we do ahead of that October deadline? We’ll look at a number of sectors, we’ll try to start rebalancing and rein in the export levels,” Redonnet said.

Quotas and tariffs to protect EU industries

To defend its steel industry, the EU doubled tariffs on certain steel imports on 1 July and reduced quotas for the sector. Similar safeguard measures could be used in other industries in the coming weeks, the senior EU official said.

He added, however, that safeguards require the backing of a majority of member states and that not all EU countries share the same interests. Some have factories directly threatened by Chinese competition, while others have industries that rely on cheap Chinese products.

“If we had to defend European manufacturing in two to three member states, we would need the backing of a majority of all member states. And those other member states may be focused on users’ interests rather than producers’ interests,” he said.

In parallel, to rebalance the situation among EU member states, the Commission is working on a solidarity mechanism to compensate those most affected by a surge in Chinese imports.

The EU executive also plans to defend the EU market product by product as China heavily subsidises its exports to the EU prompting the Commission to resort to anti-dumping and anti-subsidy duties.

Last Thursday, it launched an anti-dumping probe into Chinese Peking duck producers.

Reviewing and adjusting trade defence tools is part of the mandate EU leaders gave the Commission in mid-June, asking the EU executive to engage with China while keeping all options on the table to defend the EU market.

Belgium has issued five visas to a Taliban delegation to attend a European Union meeting on migration in Brussels and discuss the deportation of Afghan asylum seekers from European nations.

The meeting, expected to take place on Tuesday, will be the first time the EU has hosted the group since it returned to power in Afghanistan almost five years ago.

A spokesperson from the Belgian Foreign Ministry told reporters that the five visas were granted on Monday after a security assessment and that they are valid for Belgium for one day only.

The European Commission said it has invited the Taliban officials for discussions on irregular migration from Afghanistan to the 27-member bloc, and to also discuss the deportation of Afghan people in the EU who have had their asylum applications rejected.

The EU has not identified which Taliban representatives were invited to the meeting. Several senior Taliban leaders are also under EU sanctions.

“Member States are looking into ways to return persons who have committed serious crimes and who are possibly a security threat. So this is the initiative that the Commission is now following up on,” Commission spokesman Markus Lammert told the EU’s daily news briefing on Monday.

According to a letter seen by the Reuters news agency and addressed to Abdul Qahar Balkhi, a Taliban Foreign Ministry spokesman, the meeting will focus on “the return and readmission of Afghan nationals without a right to stay in the European Union”.

The Commission, however, emphasised that this meeting does not mean Brussels is formally recognising the Taliban.

Since returning to power in August 2021, the Taliban have steadily curtailed rights, restricting women’s freedom of movement, banning girls from education beyond primary school, and enforcing morality laws that limit free expression and access to employment. European governments also shut their embassies in Kabul when the Taliban authorities returned to power.

Rights organisations have asked the Commission to abandon its plans to talk with the Taliban.

“Any engagement with the Taliban needs to prioritise protecting human rights and accountability – not deporting people to danger there,” Fereshta Abbasi, Afghanistan researcher at Human Rights Watch, said.

Earlier this month, the EU’s migration chief Magnus Brunner defended the outreach, saying Brussels had no other option than to talk to the Taliban government about returning Afghan asylum seekers who had entered the 27-member bloc irregularly.

European governments have sought a tougher stance on migration as public opinion has hardened, spurring far-right electoral gains across the continent.

EU countries have received about a million asylum applications filed by Afghans between 2013 and 2024, according to the bloc’s migration agency.

Although Afghans are among the nationalities with the highest asylum recognition rates in the EU, overall acceptance has tightened as migration ⁠policies become more restrictive.

About 20 of the EU’s 27 member states expressed interest in returning numbers of migrants without a right to stay, particularly those with criminal convictions, to Afghanistan in a letter last year.

EU law allows for deportations of people convicted of serious crimes or ⁠deemed security threats in certain cases, but returns to Afghanistan have been limited due to the lack of diplomatic relations.

“The focus for member states is very much on persons who have committed serious crimes or who pose a security threat,” Commission spokesman Lammert told journalists Monday.

Afghanistan is, however, currently mired in a deep humanitarian crisis. According to the United Nations World Food Programme, more than 17 million Afghans – or one-third of the population – are “food insecure”, while the country is absorbing tens of thousands of people returning from Iran and Pakistan.

“The desperate scenes of people – including EU staff – fleeing Afghanistan are a recent memory,” Eve Geddie, director of Amnesty International’s European Institutions Office, said in a statement.

“It is unconscionable that the EU would now try and deport people to Afghanistan, which has only become more dangerous in the meantime,” she added.

As the European Union tries to fight its record-high €1 billion deficit per day with China, the bloc’s leaders are increasingly pointing to the problem of currency manipulation, which they say Beijing is using to make products even cheaper on the EU market – which is already flooded with Chinese imports.

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“An artificially low currency is an advantage for those who want to improve their economic competition positions,” German Chancellor Friedrich Merz said after the European Council summit on 19 June.

The matter of the Chinese currency and its management was also high on the agenda of last week’s G7 summit in France.

The signs are that this is a new front in Europe’s trade battle against Beijing. To understand why the devaluation of the yuan (or renminbi) matters, here are three things to know.

What’s wrong with the Chinese currency?

According to a report by the Haut Commissariat à la Stratégie au Plan, a French government advisory body, the undervaluation of the yuan is estimated at around 20-25 percent.

“While there is no universally recognised method for determining unequivocally whether a currency is significantly overvalued or undervalued, the assessment that the renminbi (RMB) is significantly undervalued is now widely shared, including among international institutions,” the report said.

In theory, China’s trade surpluses should naturally create demand for the yuan, leading to an appreciation of the currency, but it is not the case.

However, the devaluation of the yuan might not be the direct result of central bank intervention. Alicia Ferro Herrera, an expert at the Brussels-based think tank Bruegel, told Euronews that China prevents its currency from appreciating faster by not bringing all of its export revenues back to the mainland.

“They stay in Hong Kong and they are not converted into RMB,” she said.

How does it impact trade between China and the EU?

The EU deficit with China hit a record-high €359.9 billion in 2025. That same year marked the first time that all EU member states had a trade deficit with Beijing, including Germany, the EU’s largest economy.

“This is simply not sustainable,” European Commission President Ursula von der Leyen said last Friday.

According to the Haut Commissariat au Plan report, the undervaluation of the yuan plays a large part in keeping Chinese products competitive; as things stand, they are assessed by EU industry to be around 30-40 percent cheaper than European equivalents.

However, Ferro Herrera pointed out that the inflation differential also plays a great part.

“My estimate is that the inflation differential and its accumulation in Europe since the invasion of Ukraine explains about three quarters of the loss in external competitiveness,” she said.

What can the EU do?

In his remarks last Friday, Merz suggested the EU begin dialogue with China on the currency issue.

“We have to talk about this topic with each other,” he said. “It is in the interest of both sides.”

The German chancellor cited the 1985 Plaza Agreement, which saw the US, Japan, West Germany, the UK and France agree to depreciate the US dollar against the Japanese yen and the Deutsche Mark. The goal was to head off a protectionist turn from the US as its trade deficit deepened.

Merz also referred to the European Monetary System, which before the adoption of the euro relied on exchange-rate bands to limit currency fluctuations.

“That was a system where countries could coordinate through exchange-rate corridors,” he said.

Conversely, Ferro Herrera points out that the US did not push for any such negotiation when economic imbalances were discussed during the G7 last week.

In her view, Europe should monitor China’s export prices for major sector-by-sector deviations, since this is an important sign of overcapacity, as negative price growth occurs when goods cannot be sold.

Hungarian Prime Minister Peter Magyar said he expects to finalize a political agreement with Ursula von der Leyen over the release of billions of euros in frozen European Union funds during talks in Brussels.

The negotiations focus on unlocking financial support that had been suspended under the previous government led by former Prime Minister Viktor Orban due to long standing EU concerns regarding corruption, rule of law standards, and judicial independence.

Hungary is seeking access to approximately 6.5 billion euros in EU recovery grants and 3.9 billion euros in low interest loans before a critical August deadline. Additional structural funds worth around 7 billion euros also remain frozen.

The talks come at a crucial moment for Hungary’s economy, which has struggled with weak growth, fiscal pressure, and budgetary strain over the past three years.

Why It Matters

The potential agreement carries major economic and political significance for both Hungary and the European Union.

For Hungary, securing the release of EU funds is essential to stabilizing public finances, supporting economic growth, and restoring investor confidence. The country’s economy has experienced prolonged stagnation, while high spending pressures and limited fiscal flexibility have increased urgency around external financing.

For the European Union, the negotiations represent an important test of how Brussels balances financial support with enforcement of democratic and governance standards among member states.

The dispute over frozen funds has become one of the most prominent examples of tensions between the EU and governments accused of weakening judicial independence or failing to address corruption concerns.

A successful agreement could signal improving relations between Brussels and Hungary after years of political friction under Orban’s leadership.

Key Stakeholders

Hungary’s Government

Prime Minister Peter Magyar is under pressure to secure financial relief while also demonstrating willingness to meet EU governance expectations.

European Commission

The European Commission must balance political compromise with maintaining credibility on rule of law enforcement and anti corruption standards across the bloc.

Hungarian Economy

Businesses, investors, and public institutions in Hungary are closely watching the outcome because EU funding plays a major role in infrastructure, development, and economic stability.

European Union Member States

Other EU governments are monitoring the negotiations as they could shape future disputes involving rule of law conditions and access to EU financial support.

Analysis

The negotiations reflect a broader shift in Hungary’s relationship with the European Union following the political transition away from Viktor Orban’s administration.

Under Orban, disputes with Brussels became increasingly confrontational, particularly over democratic governance, judicial reforms, media freedoms, and corruption allegations. Peter Magyar appears to be pursuing a more pragmatic approach focused on rebuilding trust with EU institutions while securing urgently needed economic support.

However, the remaining disagreements over anti corruption measures suggest Brussels still wants stronger guarantees before fully releasing funds. This highlights the EU’s growing willingness to use financial leverage as a tool for enforcing governance standards within member states.

For Hungary, the pressure is primarily economic. Frozen EU funds have limited the government’s financial flexibility at a time when growth remains weak and fiscal conditions are strained. Unlocking the money would provide both immediate economic relief and an important political victory for Magyar’s government.

At the same time, the negotiations also carry symbolic importance for the EU itself. Brussels will want to demonstrate that compromise does not come at the expense of accountability, especially after years of criticism over democratic backsliding within the bloc.

Future Outlook

If a political agreement is finalized, Hungary could begin unlocking critical EU funding in the coming months, easing fiscal pressure and improving economic confidence.

However, implementation will remain important. Brussels is likely to continue closely monitoring Hungary’s anti corruption reforms and governance commitments before fully releasing all frozen funds.

A successful deal may also help normalize Hungary’s relationship with the European Union after years of tension, potentially opening the door for broader cooperation on economic and political issues.

At the same time, the outcome could influence future EU disputes involving rule of law conditions and financial oversight, particularly as Brussels increasingly links access to funding with governance standards.

For Hungary, the immediate priority remains economic stabilization. But politically, the negotiations may also determine whether Peter Magyar can establish a more cooperative and sustainable relationship with Europe while distancing his administration from the confrontational legacy of the Orban era.

With information from Reuters.