FX.co ★ EU juggles trade responsibilities: US wins, China gets crumb

European leaders have devised an intriguing strategy. The EU is now focusing its trade efforts primarily on the US, while interactions with China have hit rock bottom.

According to Eurostat, in April, European exports to China dropped by half a billion euros. Meanwhile, during the same period, the EU significantly boosted its trade with the United States. As of now, exports have risen to 45.9 billion euros and imports to 28.7 billion euros. Back in March, these figures were 44.6 and 27.8 billion euros, respectively. In stark contrast, trade with China has taken a nosedive. European exports to China were 19.7 billion euros in March 2024 but fell to 19.2 billion euros in April. Imports shrank to 36.2 from 36.9 billion euros.

These changes occur amidst ongoing trade disputes between the EU and China. Analysts expect further declines in trade next month when the EU raises tariffs on Chinese electric vehicles to a whopping 17%–38% from the current 10%. Additionally, European businesses are bracing for retaliatory measures from Chinese authorities.

Experts attribute the April reduction in the EU's trade surplus, which tumbled to 13.9 billion euros from 22.5 billion euros in March 2024, to several factors. Among these are the Middle East conflict, which has disrupted logistics and driven up gas prices, and a decrease in the surplus of chemical product trade, which was 19.8 billion euros in April compared to 21.9 billion euros in March.

From January to April 2024, the EU exported goods worth 851.6 billion euros and imported goods worth 785.4 billion euros, resulting in a trade surplus exceeding 66 billion euros in the first four months of the year.

China has also reported a decrease in trade with Europe. In early June, the General Administration of Customs of China noted that sales to EU countries dropped by 3.9% over the first five months of 2024 due to weak demand.