EU to Propose Supply-Chain Diversification Law as China Trade Deficit Hits €1 Billion a Day
Updated
Updated · Reuters · Jun 19
EU to Propose Supply-Chain Diversification Law as China Trade Deficit Hits €1 Billion a Day
3 articles · Updated · Reuters · Jun 19
Summary
Ursula von der Leyen said the European Commission will draft a law requiring EU companies to diversify key supply sources because de-risking from China has moved too slowly.
China’s rare-earth export restrictions last year sharpened the push, and EU officials say the bloc’s goods trade deficit with China has widened to about €1 billion a day.
EU leaders also asked the Commission to open talks with major trading partners on global macroeconomic imbalances and review whether additional trade measures are needed.
Antonio Costa called the deficit “simply unsustainable,” while Belgian Prime Minister Bart De Wever said member states agreed to stand together if third countries retaliate.
The tougher line comes as transatlantic tariffs have reduced access to the U.S. market, increasing pressure on the EU to rebalance its economic relationship with China.
Can Europe de-risk from China, or will its mandatory supply chain law cripple its own economy?
As the EU confronts China over trade, are its own green energy and climate ambitions now in jeopardy?
EU’s Supply Chain Diversification Law 2026: Strategic De-Risking from China, Compliance Mandates, and Geopolitical Impact
Overview
In June 2026, the European Union is moving forward with a new diversification law to reduce its reliance on Chinese supplies, driven by a strong consensus among member states that current trade imbalances with China are unsustainable. National governments are guiding the European Commission on how to address this challenge, emphasizing the need for practical implementation and close coordination with industry stakeholders. The law will include a transition period to help businesses adapt to the new rules, reflecting the EU’s recognition that reducing dependency on China is complex and requires careful, collaborative action to ensure long-term economic resilience.