Volkswagen is cutting 100,000 jobs in Germany. That figure hangs over a two-day summit in Brussels, where European leaders must decide how to answer the flood of cheap Chinese exports. China tops the agenda when the meeting opens Thursday, alongside Ukraine, the Middle East, defence, migration, the EU's long-term budget and enlargement of the 27-country bloc.
Pressure is building from several directions. Chinese car and manufacturing exports threaten local industry and could trigger mass layoffs across Europe. Higher US tariffs add to the strain. China's exports jumped 36.3% in September from a year earlier, its customs agency said Wednesday, even as trading partners, including the EU, press Beijing to rebalance trade.
A Deficit Workers Can't Ignore
The figures are stark. The EU's goods deficit with China reached €360 billion ($402 billion) last year and had already climbed to €200 billion in the first six months of 2026. European Commission President Ursula von der Leyen called the deficit "unsustainable" and promised the EU would use every possible means to reduce it.
The Commission has changed focus. Instead of seeking better access for European firms in Chinese markets, it now wants China to sell less into the bloc. Deficits span machinery, textiles, basic metals, chemicals and cars. Trade Commissioner Maros Sefcovic called last week's preliminary EU-China deal on hybrid car imports a "very good result," but warned that it was only a first step. Leaders will likely tell the Commission to keep talking to Beijing while considering further measures. Yet a senior Commission official said Monday that dialogue alone probably wouldn't finish the job.
Paris and Berlin Align
A Franco-German paper circulated last week calls for urgent measures on chemicals and PET, the plastic widely used in packaging. It also urges limits on companies' reliance on single sources for critical supplies, and swift retaliation against countries that harm the bloc. The Commission is likely to propose the first such measure in December, even if leaders choose to keep talking to China meanwhile.
For Germany, it's a U-turn. Just two years ago, Berlin loudly opposed EU plans for tariffs on China-built electric vehicles. Now it has adopted France's protectionist stance. "It is significant that a policy switch that had been boiling under the surface in Berlin for the last few weeks and months, is now official," said Sander Tordoir, chief economist at the Centre for European Reform. "And it is significant that the two most important EU member states clearly see eye to eye on how to deal with the second China shock."
Leaders Under Pressure at Home
For some leaders, Brussels offers a break from problems at home. French President Emmanuel Macron faces student protests and steep bond losses over a budget deadlock. He lost his parliamentary majority in 2024, two years ago, and must step aside next year when his term ends, leaving European policy as one of the few levers he still holds. German Chancellor Friedrich Merz is struggling to get his coalition back on track after regional vote defeats.
Spanish Prime Minister Pedro Sanchez trails in the polls ahead of a snap election he called for November 29, about six weeks away. Polls show the centre- and far-right could win enough votes to form a government. Sanchez has pushed for a softer line towards Beijing because Spain welcomes Chinese investment. Poland's Donald Tusk and Italy's Giorgia Meloni arrive from relative strength, though rising inflation and energy costs are hampering Italy. In Poland, the nationalist president has stymied the government's agenda, while weariness towards refugees and fears of the Ukraine war spilling across the border have pushed voters towards far-right parties.
Across Europe, mainstream politicians face far-right and nationalist rivals buoyed by many voters' sense that the economy isn't generating enough wealth to fund the public services they expect.
Why This Matters:
Every job lost at a carmaker or chemical plant hits a community already questioning whether the economy works for ordinary people. That doubt feeds far-right parties, as the summit's backdrop makes clear. No single member state can rebalance a €360 billion deficit alone, so a common EU response matters. But trade defence will help workers only if leaders pair it with investment in affected regions, retraining and public services. Leaders who agree on tariffs but leave those protections vague risk letting nationalists argue that Brussels can't deliver. The test is whether European unity on China brings security to those whose livelihoods are on the line.