European Union’s trade measures could impact 27% of China’s exports, Goldman Sachs warns

Goldman Sachs estimates that the EU’s emerging trade measures against China could affect roughly 27% of China’s annual exports to the bloc, a figure that underscores just how much economic firepower Brussels is willing to consider as its trade deficit balloons. The investment bank’s July 2 analysis paints a picture of a European Union that’s increasingly uncomfortable watching Chinese goods flood its markets. China’s exports to the EU climbed approximately 16% during the first five months of 2026, and the goods trade deficit with China widened to €98 billion in Q1 2026, the highest level since Q3 2022. A scalpel, not a sledgehammer The EU is not about to go full Washington. Goldman Sachs views blanket tariffs, the kind the US has embraced, as unlikely for one straightforward reason: Europe depends heavily on Chinese critical materials, particularly rare earths that underpin everything from electric vehicle batteries to wind turbines. Instead, the firm expects Brussels to deploy a more surgical approach, targeting specific sectors where Chinese goods are most visibly displacing European producers. Steel, machinery, and basic chemicals sit at the top of that list. EU leaders opened t...