The solar panel dispute is by far the biggest trade controversy between the EU and China. Under the Climate and Energy Package 2020, the EU became the largest market for solar panel products, reflecting growing demand for renewable energy consumption. China, meanwhile, has surpassed the EU as the largest solar panel manufacturer in the world. The lower prices of Chinese solar panels have encouraged installation of the solar system in EU Member States. A group of European manufacturers who felt marginalised by the pricing of Chinese exporters, however, lodged a petition to the European Commission against alleged unfair competition. After an investigation, the EU imposed tariffs on solar panels imported from China, prompting the latter to immediately launch an anti-dumping probe on European wine. Since the EU is China’s largest trading partner and China is the EU’s second largest partner, both parties decided to settle the dispute through negotiations instead of starting a trade war. In July 2013, the EU and China settled the solar panel dispute. This paper analyses the settlement of the trade dispute between the EU and China. The author addresses the challenges for the EU and argues that a less divided EU would be more effective for future trade negotiations as both sides recognize that it is important to maintain good trade relations with China.