On February 18, Draghi urged the EU to act as one state, tackle AI, energy, and trade challenges, and boost competitiveness through unity and large-scale reforms.
In terms of trade, the EU operates under a single policy managed at the EU level rather than by individual member states. This covers trade negotiations, tariffs, and agreements with non-EU countries. Company sizes and trade patterns vary across member states, with Germany as the main outlier. Rather than being a problem, policy adjustments could turn this diversity into a phenomenal opportunity.
Germany is the dominant trade force in the EU, but its export model is not representative of the rest of the bloc. Some recent trade disputes have more to do with Germany’s large-scale export strategy than with member states that have smaller economies and rely more on SME-driven trade. Developing a solid trade policy, with what we consider minor tweaks, could allow the EU to leverage Germany’s export pattern while also supporting the nearly 600,000 SME exporters across the Union. The latter could serve as a strong countermeasure against China’s overcapacity exports or Trump’s new normal of reciprocity.
The Unparalleled Range of EU Exports
While certain categories dominate the headlines, the EU’s export diversity is often overlooked. A globally recognized weight-loss drug from a large company, or SMEs supplying dehydrated alfalfa for the dairy supply chain, outshine larger competitors like the U.S. and China in technology and quality, highlighting the EU’s export landscape, which is rich in untapped potential.
Lithuania is home to dozens of SMEs specializing in cutting-edge laser technologies—so advanced that even China couldn’t afford to stop importing them, despite its ban on Lithuanian imports. Meanwhile, China dominates global exports of ladies’ bags, yet in 2024, it still spent $1 billion on Italian bags—an amount that exceeds its own ladies’ bag exports in value, despite shipping them in overwhelmingly larger volumes.
In a diplomatic yet assertive tone, Commissioner Šefčovič balanced a cooperative stance with a firm warning against protectionism as he addressed concerns over proposed U.S. tariffs on EU exports. He underscored the deep economic interdependence between the EU and the U.S., highlighting the EU’s efforts to strengthen its global trade position through strategic alliances and trade defense mechanisms. Concluding, he reaffirmed that the transatlantic bond remains the natural partnership for the EU.
Hybrid cars are not subject to extra tariffs. Policies do matter.
Denmark’s semaglutide exports are included in global EU data but are not specifically listed as going to China. The destination is undisclosed, and a dummy trade partner code is used legally to obscure the main export.
China, however, openly records the import of Denmark’s semaglutide under an entrepot trade code. Under this code, the product is expected to undergo minimal transformation before being re-exported, such as through repackaging. In the past, however, China had categorized the import under processing trade mode.
The EU’s trade deficit with China from 2022 to 2024 matches the total deficit recorded over the six years from 2016 to 2021.
Given the current Trump narrative, this only adds fuel to the fire—but it is what the trade data reveals.
EU imports from China show a clear trend: while sea freight imports dropped by 1% in value, they increased by 7% in volume. For air freight, imports grew by 2% in value, but the volume saw a much larger increase of 17%.
Excluding South Africa, China exports $9 to African countries for every $5 it imports.
China’s interest in South Africa is mainly focused on its natural resources, giving China the flexibility to adjust imports at will. In 2024, imports from South Africa saw notable declines: gold imports dropped by 25%, copper by 19%, and diamonds by 14%. Overall, China’s total imports from South Africa decreased by over 4%.
We believe that in 2025, China will likely increase its imports from South Africa. The reason is straightforward: South Africa assumed the G20 presidency for 2025, and the G20 summit will take place in Johannesburg in November. Xi is probably looking to highlight the advantages of BRICS membership to his counterpart.
According to the rotational system, the U.S. is set to host the G20 summit in 2026. Given Mr. Trump’s unpredictable nature, who knows if it will actually take place?
China is strengthening its control over rare earths. A new regulation, still in the public comment phase, emphasizes the centralization of rare earth mining and processing within state-backed companies, restricting access to quotas for smaller players and foreign entities. This move further consolidates China’s dominance and regulatory control over the rare earth supply chain.
Folks at The Rare Earth Observer explain it crystal clear.
To put it even more bluntly: If you are a junior rare earth miner, you’d better have a customer in the West for your product, because it will be anything but certain that you can place your quantities on the China market. You are of course free to stir your product in your morning coffee.