As trade war with China looms, how can the EU defend itself?

The European Commission is preparing measures to counter China’s growing trade surplus with the EU, which reached $113 billion in the first four months of 2026, as Beijing threatens retaliation over EU market access restrictions. Proposed strategies include diversifying supplier sources, imposing tariffs on strategic sectors like chemicals and steel, investigating anti-dumping and subsidies, and activating the Anti-Coercion Instrument as a last resort." "article": "The European Union faces mounting pressure as China’s trade surplus with the bloc surged to $113 billion in the first four months of 2026, up from $91 billion in the same period last year. The EU’s total trade deficit with China hit €359.9 billion in 2025, prompting the European Commission to explore measures to defend local industries amid threats of Chinese retaliation over EU market access laws. A key proposal involves forcing EU companies to source critical components from at least three suppliers, with no single supplier exceeding 30-40% of total purchases. This follows China’s 2025 restrictions on rare earth and chip exports, which disrupted EU sectors like green technology, automotive, and defense. The Commission also plans to introduce new tools by September 2026 to combat unfair trade practices, including quotas and doubled tariffs on steel imports—already agreed in April. However, the chemical industry warns that targeting China risks retaliation, as 30% of its sales come from exports, including to China. Anti-dumping and anti-subsidy investigations remain lengthy, with up to 18-month delays, while the Anti-Coercion Instrument (the ‘trade bazooka’) requires unanimous member state approval. Germany previously opposed tariffs on Chinese electric vehicles, signaling potential divisions over enforcement. With China banning Chinese firms from EU foreign subsidy investigations and escalating trade tensions, the Commission’s May 29 debate will determine whether the bloc can balance protectionism with global market stability.