EU curbs could hit 27% of China’s exports, Goldman says

The European Union's existing and proposed trade measures against China could cover about 27% of China's annual nominal exports to the bloc, Goldman Sachs ↘ 0.36% said in a report, underscoring the scale of what is at stake as the two economies remain locked in a deepening trade standoff.

The estimate, published Sunday by Goldman economists Xinquan Chen and Chelsea Song, does not translate directly into lost exports. "Broader restrictions would threaten China's market-share gains, though cost competitiveness, leverage in critical materials and Europe's commercial interests should cushion the impact," the economists wrote, according to Bloomberg.bloomberg

Key Sectors and CBAM Expansion

Among the EU's main new proposals are additional tariffs on plug-in hybrid vehicles. Goldman also flagged a potential expansion of the EU's Carbon Border Adjustment Mechanism as "a major escalation, with China facing the largest exposure."irishexaminer

The CBAM, designed to tax imports produced under weaker environmental standards, could be extended beyond basic steel and aluminum to cover an additional €50 billion in Chinese exports, the bank said. Electrical and transport equipment, along with machinery, would face the greatest risk — sectors that Goldman estimates contributed 4.9 percentage points of China's 8.5% nominal export growth to the EU last year.caliber+1

Goldman expects the broader CBAM measures to remain distant from implementation, forecasting effective enforcement no earlier than 2028.irishexaminer+1

Surging Chinese Exports Fuel Brussels' Response

The report arrives against a backdrop of sharply rising Chinese exports to the EU. China's shipments to the bloc climbed roughly 16% during the first five months of 2026, while the EU's goods trade deficit with China widened to €98 billion in the first quarter — the highest since the third quarter of 2022, according to earlier Goldman research reported by Reuters Thomson Reuters Corporation ↘ 4.69%.cryptobriefing+1

Europe's share of global capital-goods exports has fallen to 43% from 54% in 2005, while China's has surged to 24% from 7%, Goldman noted in its July analysis.globalbankingandfinance

FSR Tensions Escalate

Separately, the China Chamber of Commerce to the EU warned that the EU's Foreign Subsidies Regulation information requests have become "excessive or disproportionate," arguing that companies now have stronger grounds to raise formal objections. The complaint follows China's Ministry of Justice ruling last week that the EU's FSR investigation into JD.com ↗ 1.64% constituted unlawful extraterritorial jurisdiction, ordering that no Chinese organization or individual comply with the probe.china+1

China issued a similar blocking order in May regarding an FSR investigation into security-equipment maker Nuctech, marking an escalating pattern of direct legal confrontation between Beijing and Brussels over the regulation's reach.china