Europe Gears Up for Trade War With China
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- Xi Jinping marked 50 years of China-EU diplomatic relations in 2025 by inviting Brussels to "uphold multilateralism," but Premier Li Qiang dismissed European "China Shock 2.0" concerns and told them to focus on "China Opportunity 2.0," offering no substantive concessions on trade.
- EU leaders, with the exception of Spain, tasked the European Commission last month with drafting options to counter Chinese unfair trade practices, while France proposed protections equivalent to a 30% general tariff on China and Chancellor Friedrich Merz signaled Germany's readiness to act.
- China's trade surplus with the EU reached approximately $411 billion last year, and Chinese exports to the EU have increased 89% since 2015, according to the source, as China's global manufacturing share rose from 6% in 2000 to roughly 30% while the EU's fell from 30% to 17%.
- Germany is losing 10,000 industrial jobs a month, and tunnel-boring-machine maker Herrenknecht's founder declared: "The China shock is real. And it is hitting German industry with full force," per the source.
- An OECD report found Chinese firms received three to eight times more government support than firms in OECD countries between 2005 and 2024, while the Chinese currency is estimated to be undervalued by 16% to 30%, according to the source.
- Beijing has built a comprehensive legal framework for export controls and intelligence on European supply chain dependencies that it can weaponize to keep markets open, the article warns, and in late 2024 the EU imposed tariffs of 17% to 35% on Chinese electric vehicle imports.
Why it matters: If the EU fails to shield its automotive, machinery, chemicals, pharmaceuticals, and green-energy sectors, Europe could lose hundreds of thousands of jobs and its rearmament goals become impossible as China gains the leverage to turn the EU into a political vassal. The consensus among EU leaders — minus Spain — to ask the Commission for action options marks a concrete policy shift after a decade of complacency, with Germany's $114 billion projected trade deficit this year and France's proposed 30% tariff showing the scale of measures now on the table.
