France and Germany propose EU-level countermeasures to combat Chinese trade aggression
Executive summary: French President Emmanuel Macron and German Chancellor Friedrich Merz submitted a letter to the European Commission proposing an arsenal of tools to exclude goods and services from the EU market in response to trade wars. This move could fundamentally alter EU trade policy, shifting from open market principles to aggressive defense mechanisms against external economic pressures, specifically targeting China.
Who is involved: Emmanuel Macron (France), Friedrich Merz (Germany), European Commission, China.
Likely next: The European Commission will review the proposal, likely triggering debates among EU member states regarding the legality and economic repercussions of such exclusionary measures.
France and Germany have asked the European Commission to create a new defensive instrument that would enable the bloc to bar goods and services from countries judged to be engaged in trade warfare, specifically targeting non‑market economies. The request, voiced by President Emmanuel Macron and Chancellor Friedrich Merz, reflects a move from the two largest EU members toward a more active stance on protecting the internal market from what they view as unfair Chinese practices. The proposal seeks to address longstanding European concerns about Chinese overcapacity, state‑driven subsidies and the parallel buildup of legal tools that, according to analysts, squeeze European value chains. If the Commission adopts the measure, it could reshape EU‑China trade flows, prompting firms to reassess sourcing strategies and potentially inviting retaliatory actions from Beijing. In the near term, the initiative is likely to trigger a formal impact assessment and debate among member states before any concrete rule is finalised.
What's next — scenarios
Base Case: EU-wide defensive mechanism adopted (50%)
Increased trade tensions with China and higher regulatory compliance costs for importers.
- European Commission endorsement of the proposal
- Consensus among major EU member states
Downside: Implementation failure due to WTO rules (30%)
The proposal remains a political statement without legal teeth, leaving the EU exposed to trade imbalances.
- Legal challenges from China at the WTO
- Internal EU opposition from countries reliant on Chinese imports
Upside: Rapid escalation of targeted tariffs (20%)
Immediate retaliatory measures from China, affecting specific sectors like automotive or electronics.
- Formal declaration of a 'trade war' by the EU
- Specific sector-based bans implemented by the Commission
What to watch
- European Commission's formal response to the Macron-Merz letter
- Official reaction from the Chinese Ministry of Commerce
- Upcoming discussions at the Deutschland-Gipfel on October 7 regarding economic transformation
Timeline
- — L’Allemagne et la France passent à l’offensive pour rééquilibrer les échanges commerciaux avec la Chine (Le Monde — Économie)
- — Voitures électriques : en Chine, la malédiction des modèles éphémères (Le Monde — Économie)
- — « Les Etats-Unis et la Chine construisent des arsenaux juridiques symétriques qui prennent en étau la chaîne de valeur européenne » (Le Monde — Économie)
Analysis — what this means
Likely next events
- Deutschland-Gipfel on October 7 to discuss German economic transformation
- Possible European Commission regulatory review sessions in late 2026
Sectors affected
- Automotive
- Consumer electronics
- Industrial manufacturing
- Logistics and supply chain management
Regulatory implications
- Potential creation of new EU-wide trade defense instruments
- Heightened scrutiny of non-market economic practices within the EU single market
Historical parallels
- US-China trade tensions and tariff escalations (2018-present)
- EU anti-subsidy investigations into Chinese electric vehicles
Key entities
Sources
- L’Allemagne et la France passent à l’offensive pour rééquilibrer les échanges commerciaux avec la Chine — Le Monde — Économie
- « Les Etats-Unis et la Chine construisent des arsenaux juridiques symétriques qui prennent en étau la chaîne de valeur européenne » — Le Monde — Économie
- Voitures électriques : en Chine, la malédiction des modèles éphémères — Le Monde — Économie
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