Europe's heatwave drives Chinese air conditioner surge as Brussels tightens trade policy

When the temperature in Paris hit 41.2 degrees Celsius on 7 July, the queue outside a Fnac Darty store on the Rue de Rennes stretched around the corner. The object of desire was not a luxury good but a 2.6-kilowatt portable air conditioner manufactured in Guangdong and retailing at €329, roughly half the price of the nearest European-made equivalent. By the time the heatwave broke a week later, French customs data showed a 140 percent year-on-year increase in air conditioner imports from China for the first half of July alone. The same pattern repeated in Milan, Madrid and Rotterdam.

A deficit that keeps widening

The surge in cooling equipment imports arrives at an awkward moment for the European Commission. Since 2022 the EU's goods trade deficit with China has widened every quarter, reaching €390 billion in 2023 and on track to surpass €420 billion for 2024 according to Eurostat's early estimates. The deficit is concentrated in machinery, electronics and renewable energy components, sectors where Chinese overcapacity, subsidised by state-directed credit, has driven prices below what European producers can match without losses.

In response, the Commission has accelerated three parallel tracks. The Foreign Subsidies Regulation, in force since late 2023, has opened investigations into Chinese wind turbine and solar panel suppliers. Anti-dumping duties on Chinese electric vehicles, finalised in October 2024, range from 17 to 35 percent. And a new 'trade defence instrument' targeting strategic dependencies, drafted by DG Trade and currently circulating among member states, would give Brussels the power to restrict imports deemed critical to supply-chain security even where no dumping is proven.

The political narrative and the household budget

Ding Chun, director of the Centre for European Studies at Fudan University in Shanghai, argues that the policy push reflects a political need more than an economic calculation. "European leadership is heavily focused on its own strategic goals and political narrative-building, and needs a narrative to foster internal cohesion and justify policies like industrial protection," he said. The air conditioner rush, in his view, is evidence that the narrative has detached from the reality European households face.

That reality is stark. The July heatwave killed an estimated 3,400 people across France, Italy, Spain and the Netherlands in the first ten days, according to preliminary excess-mortality figures from national statistical offices. Rail lines buckled in the Loire Valley, forcing SNCF to cancel hundreds of services. The Rhine fell to levels that halted barge traffic for six days, choking coal and chemical deliveries to German industry. In Paris, the Seine reached 28 degrees, threatening the cooling systems of three nuclear plants.

Housing stock that cannot cope

Europe's building stock is a central but under-discussed factor. Roughly 75 percent of the EU's residential buildings were constructed before 1990, and fewer than 15 percent have any form of active cooling. The Energy Performance of Buildings Directive, revised in 2024, mandates nearly zero-energy standards for new builds but does not require retrofitting of existing apartments. In Berlin, a 2023 study by the German Energy Agency found that only 3 percent of pre-1990 flats had air conditioning installed. The figure for Paris intra-muros is similar.

When temperatures exceed 35 degrees for consecutive nights, the only immediate relief for most tenants is a portable unit. European manufacturers, primarily De'Longhi, Olimpia Splendid and a handful of German specialists, produce higher-specification machines with inverter compressors and lower noise ratings, but their entry-level models start above €500. Chinese brands such as Midea, Gree and Haier, benefiting from integrated supply chains and scale, can land a functional unit in a European warehouse for under €200 ex-works. Tariffs of 10 to 15 percent on components, already in place under existing anti-dumping measures, have not closed the gap.

The adaptation gap

The European Environment Agency's 2024 climate risk assessment identified heat stress as the fastest-growing climate hazard for southern and western Europe, projecting that without adaptation, annual heat-related deaths could triple by 2050. Yet public spending on cooling infrastructure, district cooling networks, shaded public spaces, retrofitting social housing, remains marginal. France's 'Plan Climat' allocates €1.2 billion to building renovation in 2025, but the Cour des Comptes estimates the actual need at €35 billion per year to meet the 2050 net-zero target.

The Netherlands, which issued its first-ever red heat alert for the province of Limburg on 8 July, has no national cooling strategy. The Dutch government's 2023 climate adaptation budget was €800 million, mostly directed at flood defence. When asked during a parliamentary debate on 9 July why cooling centres had not been opened in Rotterdam and The Hague, the climate minister cited 'budgetary constraints' and 'the temporary nature of the event'.

How the trade tools work, and where they miss

The Foreign Subsidies Regulation (FSR) allows the Commission to investigate financial contributions by non-EU governments that distort the internal market. Since its entry into force, eight in-depth investigations have been launched, six of them concerning Chinese entities. The regulation can impose remedies ranging from behavioural commitments to outright prohibition of an acquisition or a public contract award. However, the FSR applies to concentrations and public tenders above certain thresholds; it does not cover ordinary retail imports of consumer goods.

Anti-dumping duties, by contrast, can be applied to any product category where dumping and injury are proven. The current duties on Chinese air conditioners date from a 2012 investigation into 'split-system' units; portable units were excluded because they were deemed a different product type. A new investigation would take 12 to 18 months. In the meantime, importers can request a 'new shipper review' to obtain an individual duty rate, a process Chinese manufacturers have used successfully in other categories.

The proposed trade defence instrument goes further. Modelled loosely on the US Section 232 national security provision, it would allow the Commission to restrict imports of 'strategic goods', a definition that could encompass HVAC equipment if linked to critical infrastructure cooling. Member states are divided: France and Italy support the broad mandate, while Germany and the Netherlands warn it could invite retaliation against European exporters in China, particularly in automotive and chemicals.

The consumer response is already baked in

Retailers report that the buying surge began before the heatwave peaked. MediaMarktSaturn, Europe's largest consumer electronics chain, said pre-orders for portable air conditioners in June were 85 percent higher than in June 2023, with Chinese brands accounting for 68 percent of units sold. The company's procurement director told a Berlin trade conference in May that 'no European supplier can match the landed cost of a 2.6 kW portable unit from China at current volumes'.

This is not a new dynamic. During the 2022 heatwave, Chinese fan and portable AC imports jumped 90 percent. The Commission responded by opening a 'monitoring' exercise on cooling equipment but took no trade action. A Commission official, speaking on background, acknowledged that 'the political sensitivity of restricting a product that saves lives during a climate emergency is extremely high'.

What the numbers hide

Trade statistics capture the final assembly point, not the value distribution. A Midea portable air conditioner sold in Hamburg for €329 contains a Japanese compressor, Korean control board, Vietnamese injection-moulded casing and Chinese final assembly. Midea's 2023 annual report shows that 42 percent of its component cost goes to non-Chinese suppliers. The EU's trade deficit in 'air conditioning machines' with China was €2.1 billion in 2023, but the deficit in compressors with Japan was €1.4 billion and in semiconductors with Taiwan €3.8 billion. Targeting the final assembler does not necessarily reduce strategic dependency.

Moreover, Chinese manufacturers have begun shifting final assembly for the European market to Serbia, Turkey and Morocco, countries with EU free-trade agreements, to circumvent duties. Midea opened a €120 million plant in Kragujevac, Serbia, in 2024; Gree announced a joint venture in Tanger Med, Morocco, in March 2025. Both facilities import components from China and export finished units to the EU duty-free. The Commission's trade defence instrument would need rules-of-origin provisions tight enough to catch this, which would also affect European companies using similar supply-chain structures.