Trade conflict: The EU wants to be able to shoot faster against China

Germany and France are preparing the EU for a tough trade conflict with China. In order to stop Beijing's unfair trading practices, the EU Commission should in future be given the opportunity to completely exclude a country from the European internal market. Chancellor Friedrich Merz and President Emmanuel Macron even want to introduce a new urgent procedure for this.

This emerges from a joint letter that Merz and Macron sent to EU Commission President Ursula von der Leyen. The CDU politician is currently preparing her response to the “China Shock 2.0”, which is severely affecting German and European industry. The German-French initiative is only one element, albeit an important one.

Before decisions are made in Brussels, Trade Commissioner Maroš Šefčovič wants to travel to Beijing this Thursday to talk to his counterpart Wang Wentao about possible Chinese concessions. The EU summit will also take place in Brussels next week. Merz and Macron will have to defend their ideas – not all EU countries are on an anti-China course.

Spain and Hungary have spoken out against a trade war and in favor of compromises. Šefčovič also didn't sound very combative before his trip to Beijing. He is optimistic that his journey will bear fruit: “You have to believe that you can achieve something, otherwise it’s better not to go at all.” However, the Commission is “far from reaching its goal”.

The Franco-German letter could now help Šefčovič to persuade the Chinese to make concessions. It would then primarily be a tactical maneuver to build up pressure. The proposals sound more like Germany and France want to prepare for a huge battle. Experts speak of a “kill switch” or “nuclear options” – as in nuclear war.

The effects would be drastic. The new “second strike capacity” that German EU circles are talking about is intended to be used if a country – meaning China – imposes new tariffs or sets up barriers, for example when it comes to access to rare earths. In this case, the EU Commission should be able to stop access to the European internal market - not for individual products or sectors, but for the entire country.

This extreme measure is to be imposed as an urgent procedure - we are talking about a few days. In addition, the EU should impose punitive tariffs more quickly. Until now, Brussels needed a lot of time to take countermeasures. Merz and Macron are now calling for the EU Commission to be given a free hand. Their decisions should only be stopped with a qualified majority – and only retrospectively.

The new hard line is notable for several reasons. On the one hand, Merz has so far been more in favor of being lenient in China policy. At the last EU summit he warned of a trade war - that is now apparently over. Macron has prevailed with his protectionist demands - even against the German auto industry, which has been on the brakes for a long time.

On the other hand, the EU already has powerful trade policy weapons, although these have never been tested. This particularly applies to the so-called anti-coercion instrument ACI. It was introduced in 2023 and already provides for the possibility of imposing counter tariffs and restricting access to the internal market.

The ACI could have been used several times, most recently in the customs and trade dispute with US President Donald Trump. But Brussels has shied away from this. It is unclear why the Europeans now need an even sharper weapon so quickly. Apparently it is intended specifically for China - but they don't want to admit that. The new proposals are “agnostic,” it was said in Berlin.

Too good German: They are not aimed at a specific country. That would contradict commercial law and would be tantamount to an economic sanction. However, the EU can only decide on sanctions unanimously - Merz and Macron want to prevent that. Sanctions against Russia had repeatedly failed due to the veto of individual EU countries. You want to shoot faster against China.