Trade analysts note that dairy was not chosen at random. Food products, and dairy in particular, have long served as effective leverage in trade disputes due to their economic importance, political sensitivity and visibility across rural constituencies. By targeting European dairy, China signalled both its capacity and willingness to retaliate beyond the industrial sectors that triggered the dispute.
The situation has been further complicated by internal divisions within Europe. Germany’s automotive sector, deeply exposed to the Chinese market, has reportedly sought exemptions or softer enforcement of EV duties. According to observers cited in European political reporting, these efforts have done little to ease tensions and have, in some cases, heightened Beijing’s dissatisfaction with the EU’s overall approach.
Meanwhile, global trade flows are being disrupted by a broader return to protectionism. The United States’ renewed emphasis on trade barriers under President Donald Trump has added another layer of complexity, displacing exports and imports across multiple regions. This environment makes resolving long-standing issues such as market access, subsidies and industrial policy coordination even more difficult.
Data trends reinforce the imbalance. Chinese exports to Europe have resumed growth and now exceed European exports to China by more than double, while EU shipments in the opposite direction continue to decline. French President Emmanuel Macron has publicly argued that without cooperative rebalancing involving China, the United States and the EU, Europe may be forced to adopt even more protectionist measures to defend its industries.
So far, those calls have gone unanswered. Chinese President Xi Jinping has shown no indication of adjusting trade policy in response to European concerns. According to Francesca Ghiretti, director of the China Europe Initiative at the RAND think tank, the dynamics observed in 2025 are likely to intensify further in 2026, rather than ease.
For global dairy markets, including exporters in Australia and New Zealand, EU–China trade tensions are not a distant European issue. When European dairy products face new barriers in China, trade flows tend to be redirected, altering competition, pricing and market access across Asia-Pacific and beyond. While such disruptions can create short-term opportunities for alternative suppliers, they also increase volatility and reinforce China’s role as a powerful gatekeeper in global food trade.
The escalation underscores a broader reality: dairy has become more than a commodity. It is now a strategic asset within an increasingly fragmented global trading system, where geopolitical considerations weigh as heavily as supply and demand fundamentals. As 2026 approaches, exporters, processors and policymakers alike will be watching closely to see how far EU–China trade tensions extend—and how deeply they reshape the global dairy landscape.
*Written for eDairyNews, with information from Australia India News