The EU-China trade war: what if Beijing hits back?
The European Union is considering aggressive trade measures against China to protect its green technology sector, but experts warn of the high risk of retaliation. Replacing Chinese supply chains would be prohibitively expensive, and China has demonstrated a capacity to disrupt global markets through export controls.
Why it matters
This highlights the precarious economic interdependence between the EU and China and the potential for a damaging global trade war.
EU leaders are increasingly sounding the alarm over China’s dominance of green tech and its state-backed industrial model. As Brussels searches for ways to protect Europe’s industrial base, the temptation is to strike hard in response, through the use of aggressive trade measures and an expansion of the EU’s trade-defence and industrial-policy toolbox.
But an aggressive response risks provoking retaliation from the EU’s second-largest trading partner. That tension was evident at the June European Council summit, where leaders sounded alarm about “global macroeconomic imbalances” but stopped short of endorsing a more confrontational approach.
Pursuing a policy that Beijing perceives as offensive carries real risks, given that Europe’s dependence on China is a structural reality.
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