Relief Is Temporary, Dependence Is Not
Eased export licences offer Europe breathing space, but structural imbalances continue to shape trade, industry, and geopolitics.
Dear Readers of Eurasia Dispatch,
Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.
This week, Eurasia Dispatch covers:
Institutions
Member states
Business
Commentary
INSTITUTIONS
China’s rare earth magnet exports to Europe rebound
After months of uncertainty, Chinese exports of rare earth permanent magnets to the European Union rebounded sharply in November, following Beijing’s decision to issue general export licences with longer validity periods.
According to data from China’s General Administration of Customs, magnet shipments to the EU rose by nearly 60 per cent year-on-year to around 2,570 tonnes. Compared with October, volumes were up by almost a quarter.
The increase appears closely tied to the rollout of general licences, which allow repeated shipments of restricted materials and downstream products over a defined period. For European manufacturers, the move has provided short-term relief at a time when concerns over supply security and production bottlenecks remain acute.
The picture looks markedly different across the Atlantic. Exports of permanent magnets to the United States declined by almost 9 per cent year on year in November, falling to about 582 tonnes.
The Eurasia Dispatch Take: The shift in trade flows offers some relief from earlier export restrictions. However, complacency would be a mistake. To address the rare earth supply chain challenge, Europe must adopt a multi-pronged approach. First, maintaining constructive economic relations with China is essential. Second, stockpiling critical materials is necessary to ensure continued industrial productivity. Third, deepening ties with alternative suppliers, such as Australia, and with nations with advanced rare earth-related technologies, like Japan, is key. Finally, Europe must focus on building its own capacity to recycle these crucial materials.
MEMBER STATES
The fallout of China’s import duties on EU dairy products
China has imposed provisional duties ranging from 21.9% to 42.7% on various EU dairy imports. Preliminary findings from an anti-subsidy investigation, which was launched in August 2024 at the request of the Dairy Association of China, suggest that EU subsidies to its dairy sector have caused significant harm to China’s domestic industry. The move is effective from 23 December.
The decision has prompted strong responses. European officials have rejected these claims, calling the measures unjustified. Germany’s Dairy Industry Association described the tariffs as a severe blow, urging that dairy products should not be caught in broader trade disputes. France has called for an emergency meeting with EU Trade Commissioner Maros Sefcovic to challenge the decision, arguing that the tariffs are unilateral and lack legal grounding.
Indirect exporters to China may also be affected. Estonia exports dairy products to other EU countries, including Italy, Germany, and the Netherlands. If Chinese tariffs impact their dairy exports, it could result in a decline in Estonian exports as well.
The Eurasia Dispatch Take: The provisional duties are the latest flashpoint in the strained EU–China trade relationship. There have been tentative signs of de-escalation, such as Beijing’s reduction of tariffs on EU pork imports, but underlying frictions persist.
Brussels has shown willingness to use trade defence instruments more assertively when it recently imposed definitive anti-dumping duties of between 90 and 115.9 per cent on choline chloride imports from China. At the same time, both sides remain locked in negotiations over a possible adjustment of the EU’s tariffs on Chinese electric vehicles, introduced in October 2024.
These parallel moves suggest that the relationship is marked by calibrated pressure on both sides.
BUSINESS
Tesla falters as Chinese EV makers surge in Europe
Tesla’s struggles in the European market deepened in November. New registrations of the U.S. electric carmaker fell by roughly a third. The downturn began late last year.
By constrast, BYD recorded the strongest growth, with European registrations nearly tripling year-on-year to about 42,500 vehicles by November. The company is accelerating its push into Europe by localising production and is weighing a new assembly plant in Spain, which would follow existing facilities in Hungary and Turkey. Such investments would help Chinese manufacturers mitigate the impact of EU tariffs on electric vehicles produced in China.
Unlike Tesla, Chinese brands have leaned heavily on hybrid models alongside fully electric cars. Hybrids, including plug-in versions, now account for roughly 44 per cent of all new car sales in Europe. The segment has become increasingly attractive to manufacturers because of stronger margins and sustained consumer demand.
The growing popularity of hybrids has dovetailed with intense lobbying from European carmakers to soften the EU’s long-term electrification targets. Brussels recently confirmed it would allow a limited share of new car sales to retain internal combustion engines beyond 2035, easing pressure on the industry.
The Eurasia Dispatch Take: European carmakers face a challenging period ahead. The first months of 2025 have shown that the import tariffs introduced in 2024 did little to slow the expansion of Chinese battery electric vehicle manufacturers in the EU market. Chinese firms continue to benefit from their scale, technological expertise, and control over key parts of the EV supply chain.
In this context, Europe’s car industry may be better served by a more pragmatic strategy. Cooperation with Chinese partners could help European manufacturers remain competitive in the short term, particularly in areas such as batteries, software, and cost-efficient production. At the same time, this approach must be paired with sustained efforts to build domestic capabilities, reinforce supply chain resilience, and diversify partnerships beyond China.
COMMENTARY
Pentagon report criticises China-India relations
The Pentagon’s annual report on China’s military and security developments highlighted that China may leverage reduced tensions along the Line of Actual Control (LAC) to stabilise its relationship with India and prevent further strengthening of US-India ties. However, the report also suggested India remains cautious, with mutual distrust and other issues continuing to limit bilateral relations.
China quickly responded, accusing the US of misrepresenting its defence policies to hinder China-India rapprochement. The Chinese Foreign Ministry labelled the Pentagon’s assessment as a distortion designed to sow discord between China and its neighbours, to maintain U.S. military dominance. The Chinese Defence Ministry also criticised the report for its inaccurate portrayal of China’s strategic intentions and for being coloured by geopolitical bias.
The Eurasia Dispatch Take: The drive for closer China-India ties goes beyond merely responding to U.S. policies. U.S. actions may affect the pace of their relationship, but the fundamental direction of China-India ties is shaped by their own strategic priorities. Prolonged border tensions from 2020 to 2024 became unsustainable, leading both sides to focus more on economic cooperation. Economic growth remains a shared priority and their bilateral relationship is expected to deepen, especially considering global trade challenges and escalating geopolitical tensions.
BEFORE YOU GO
China’s rare earth shipments to Europe, the growing footprint of Chinese EV makers across the continent, and Beijing’s tariffs on EU dairy products have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.
Until next time,
Eurasia Dispatch
P.S. As always, I am grateful to my editor.
Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.