Brussels unleashes toughest China trade crackdown yet as Beijing threatens retaliation

Brussels launches toughest China trade crackdown yet as Beijing vows retaliation

The European Commission has adopted a sweeping new trade strategy targeting China, marking the EU’s most aggressive push yet to counter what officials call a "new China shock" to European industries. The move, unveiled at a rare Beijing-focused leadership debate on Friday, sets the stage for a potential trade war as China immediately threatens retaliatory probes against the bloc.

Trade Commissioner Maroš Šefčovič outlined plans to develop a new legal instrument compelling companies in critical sectors to diversify supply chains and reduce dependence on Chinese imports, according to officials briefed on the closed-door meeting . The strategy targets heavily subsidized Chinese goods—particularly in green technology, steel, and electric vehicles—where EU officials allege unfair competition distorts the single market. Beijing responded within hours, warning it would launch trade investigations into EU exports if Brussels proceeds with proposed curbs on subsidized imports .

Germany’s endorsement of tougher action has shifted the EU’s internal dynamics, with Chancellor Olaf Scholz’s government signaling support for the Commission’s push despite Berlin’s historical caution on antagonizing China . The shift comes as German industry faces mounting pressure from Chinese competitors, particularly in automotive and renewable energy sectors. However, divisions persist within the bloc: Southern and Eastern European member states, including Hungary and Italy, continue to resist measures that could jeopardize their trade ties with Beijing, according to an analysis by *Politico* .

The Commission’s strategy arrives amid broader EU efforts to reduce strategic vulnerabilities, including a new emergency mechanism for semiconductor supply chains announced this week . Officials frame the China policy as a defensive measure, citing Beijing’s use of trade as a geopolitical tool—most recently in its restrictions on rare earth exports to Western defense contractors. Yet critics, including the *Washington Examiner*, argue the EU’s approach remains half-hearted, lacking the unified resolve of U.S. policy under the Inflation Reduction Act .

The coming weeks will test the EU’s cohesion, with the Commission expected to present formal proposals for the new trade instrument by July. Beijing’s threat of retaliatory probes—potentially targeting EU agricultural exports or luxury goods—could further strain an already fragile consensus. For now, the bloc’s largest economies appear aligned, but as one EU diplomat told *Reuters*, "The real fight will be over how far we go—and how much pain we’re willing to endure" .