China EU Trade Tensions Could Slow Exports, Says Nomura

Nomura analysts warn that rising trade tensions between China and the European Union could slow China export growth to about five percent in the coming years. This would be lower than the average growth seen from 2021 to 2025.

The main reason is the rapid rise of competitive Chinese goods, especially green technology products. Lower prices caused by deflation and a weaker yuan are helping Chinese companies sell more, but they are also triggering stronger tariff actions and protective rules from Europe.

Pressure Growing on European Companies Inside China

Nomura also highlights growing problems for European firms operating in China, especially car makers. Weak consumer demand and the ongoing property crisis are hurting sales.

German car brands once had strong control in the Chinese market, but their market share has now fallen to around twelve percent in the first eleven months of 2025, down from twenty four percent in 2020.

Local Chinese companies have moved faster toward electric vehicles. This slow shift by many European brands is creating a risk that future European investment in China may decline.

Why This Matters

If trade barriers continue to rise, both China and Europe could face weaker growth and higher uncertainty. Long standing trade relationships may change, creating new winners and losers across industries such as autos, energy and technology.