The European Commission is proceeding with caution regarding China’s recent announcement of eased export controls on key technology components like rare earths and computer chips. While the US reported a deal struck between President Donald Trump and Chinese President Xi Jinping to address chip shortages stemming from tightened Chinese restrictions, the EU remains skeptical without concrete guarantees.
This delicate situation arises from a trade dispute ignited in early 2025 when President Trump reimposed existing tariffs on Chinese goods. The resulting backlash saw China retaliate with export controls on crucial tech components that are vital for many European industries. This has particularly impacted Europe’s automotive sector, which relies heavily on these inputs.
The most pressing example is the Dutch government’s recent takeover of Nexperia, a Chinese-owned chipmaker based in the Netherlands. The move followed allegations of “serious governance shortcomings” at Nexperia and was met with retaliatory export restrictions from China on crucial chips produced by its facilities within China. These restrictions have sent ripples through European automotive supply chains, pushing some manufacturers dangerously close to production halts.
The White House claims President Trump’s recent meeting with President Xi resulted in an agreement where China will “take appropriate measures” to ensure uninterrupted flow of these critical legacy chips from Nexperia’s Chinese facilities to the global market. However, the EU hasn’t received such explicit assurances.
Henna Virkkunen, the EU’s Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, has called for diplomatic solutions and confirmed discussions with both Chinese officials and Nexperia representatives to navigate this crisis. She acknowledged the urgent need for “short- and medium-term measures” to bolster Europe’s vulnerable chip supply chain, highlighting a potential vulnerability in its reliance on external sources for these vital components.
The EU is also grappling with China’s separate restrictions imposed on rare earth exports since April. These rare earth elements are crucial building blocks for numerous industries including automotive, defense, and renewable energy technologies across the EU. Although the US announced that the newly imposed export controls on rare earths had been lifted during President Trump’s meeting with President Xi, the EU has yet to receive confirmation about whether existing restrictions implemented in April will remain in place or be eased.
The European Commission maintains that securing access to these critical materials is a top priority and underscores the need for swift action to address both sets of export restrictions placed by China.
These recent developments underscore the EU’s growing dependence on Chinese-sourced technology components and the significant risks associated with this reliance.
