EU readies for China trade clash, as frustration grows over imbalance

France and Germany have proposed a set of strategies to address China's growing trade dominance, despite their differing economic policies. The duo's letter to the European Commission outlines far-reaching proposals aimed at tackling the increasing threat posed by Chinese exports. These proposals, which could influence last-minute negotiations between the EU's trade commissioner and Chinese counterparts, aim to bolster Europe's position in the ongoing trade discussions.

The main proposal, dubbed a "second-strike capability," would empower the EU to swiftly retaliate against countries retaliating against the EU's trade measures. The letter also suggests measures to diversify supply chains and reduce European firms' reliance on a single source, aiming to mitigate the economic shock and protect the EU's status as a sovereign actor.

France and Germany also advocated for using existing trade-defence instruments more effectively, reforming safeguards to impose counter-duties on multiple countries in case of surges, and reinforcing border enforcement.

French President Emmanuel Macron and German Chancellor Friedrich Merz emphasized that these measures serve as a political signal to demonstrate Europe's intent to take a firm stance. However, China sees the letter as a strategic move to reinforce the EU's position during ongoing negotiations. Beijing has already retaliated by launching an anti-dumping investigation into European chemicals exports.

While the European Commission views the letter as a valuable contribution, the future impact of this Franco-German push on China remains uncertain.