US tariffs and Google fine test EU trade ties as China deficit hits €360bn
The European Union is navigating a mounting trade squeeze after the US imposed new tariffs, Brussels fined Google €890 million, and a diplomatic mission to Beijing highlighted a worsening trade deficit.
The United States imposed fresh tariffs of up to 12.5% on the European Union late Thursday, replacing a broader 10% duty that expired at midnight. Washington cited forced labour concerns, a justification the EU’s top trade negotiator, Bernd Lange, dismissed as "crazy" given the bloc's own strict legislation. Despite the friction, the European Commission noted the 10% baseline rate and maintained exemptions for goods like aircraft parts and medicines, keeping the duties aligned with the EU-US Joint Statement.
Simultaneously, Brussels escalated tensions in the digital sector by fining Google €890 million for breaching the Digital Markets Act. The penalty represents just 0.22% of parent company Alphabet’s 2025 revenue of €353.08 billion. However, US officials warned it could jeopardise broader economic ties, with Trade Representative Jamieson Greer arguing the move endangers the fragile EU-US trade deal and is "driving massive uncertainty for US exports".
The dual pressures from Washington highlight a precarious moment for European markets and companies navigating regulatory enforcement alongside transatlantic diplomacy. Brussels remains firm on its digital rules, with Commission spokesperson Thomas Regnier stating that the legislation is "not up for negotiation".
China deficit adds to trade strain
Across the globe, the EU's economic challenges are mirrored in its eastern relations. A delegation of nine MEPs concluded a fact-finding mission to China aimed at thawing an eight-year freeze on parliamentary ties. The trip was immediately complicated by EU sanctions targeting Chinese nationals allegedly supplying dual-use technologies for Russia's war effort.
Lawmakers are also racing against an October deadline to address a widening trade imbalance. The EU-China trade deficit reached nearly €360 billion in 2025, up from €312 billion the previous year. European Vice President Javier López noted the gap amounts to "one billion euros per day" but cautioned against triggering the bloc's anti-coercion instrument, favouring continued negotiations instead.
Sanctions package exposes internal limits
The China-Russia nexus also cast a shadow over the EU's 21st sanctions package against Moscow, agreed upon by ambassadors on Thursday. The new measures target 33 banks, 14 crypto platforms, 41 shadow fleet vessels and 37 drone producers. A key provision freezes the Russian oil price cap at $44 per barrel for a year, removing market uncertainty amid rising Urals crude prices.
Yet the negotiations revealed significant internal divisions. Greece secured an exemption to continue shipping Russian liquefied natural gas to non-EU clients, while a proposed ban on visas for former Russian combatants was heavily diluted. For investors, the watered-down package underscores the political difficulty the bloc faces in maintaining a unified front against Moscow while managing simultaneous economic pressures from its largest global partners.
