EU Weighs Trade Restrictions to Reduce Reliance on China

The European Union is preparing for a summit in Brussels to address global trade imbalances and a surge of cheap Chinese imports. This follows a G-7 meeting in Évian, France, where leaders discussed the impact of Chinese industrial subsidies. The EU is considering legislation that would require companies to diversify sensitive supply chains by using at least three different sources for critical supplies, aiming to end over-reliance on Chinese providers.

Proposed measures include expanding import quotas and tariffs for the chemical, metal, automotive, and green technology sectors. The EU also plans to bolster domestic supply chains for cloud computing and artificial intelligence. These moves follow an OECD report finding that Chinese industrial firms receive significantly higher government support than their OECD counterparts. The EU intends to increase the share of manufacturing in its GDP to 20% over the next decade.

This strategic pivot occurs as the EU manages a record goods surplus from China. The situation is further complicated by the global tariff policies of Donald Trump, which have redirected Chinese exports toward European markets. Meanwhile, the Federal Government of Germany continues to resist measures that might jeopardize its deep trade ties with China.