Overview
The European Union is moving ahead with regulatory proposals aimed at lowering excessive supply chain reliance on individual providers as officials work to reshape trade ties with China. EU chief trade negotiator Maros Sefcovic said the bloc needs a designated tool to drive diversification, and outlined a potential requirement to shift sourcing where a company obtains more than 40% of stocks from a single supplier.
Policy mechanics and political timetable
Sefcovic told a Brussels forum that "Diversification now requires a dedicated instrument." He said one element being considered would compel companies to alter their supply chains when the concentration threshold - more than 40% of stocks from one supplier - is exceeded. The European Commission is expected to receive political guidance from EU leaders at a summit later this month on which "concrete tools" to develop to bolster the bloc's economic security, Sefcovic said.
Economic context
The proposals come amid a substantial trade imbalance with China. The EU faces a c360 billion ($417 billion) trade deficit with Beijing, which also functions as the sole source for many critical inputs used by European firms. Brussels has criticized China for not opening its market and for supplying the single market with subsidized products, while noting Beijing's control over key materials such as semiconductors and rare earth minerals.
Negotiations and diplomatic outreach
Officials say the measures are intended to increase the EU's leverage after years of talks on market access and concerns about industrial overcapacity yielded no breakthroughs. The bloc is attempting to avoid escalating into a trade war, mindful that Chinese officials have warned of possible retaliation should Europe proceed with certain measures.
Sefcovic has engaged directly with Chinese counterparts, meeting earlier this week with Chinese Vice Commerce Minister Li Chenggang. He has also invited Commerce Minister Wang Wentao to Brussels in the coming weeks to try to accelerate discussions on Europe's concerns. "What we are looking at internally is how to improve the diplomatic outreach communications and discussions with our Chinese partners," Sefcovic said.
Implications for companies
The contemplated rules would force corporate reassessments of supply concentration and could prompt shifts in sourcing strategies for firms reliant on single suppliers for critical inputs. The measures would be designed to strengthen the EU's negotiating position with China without immediate confrontation, while leaving open diplomatic channels to address outstanding market-access and overcapacity issues.
Note: This report reflects statements and figures provided by EU officials and describes proposals currently under consideration. It does not add facts beyond those presented by the sources cited in official comments.