China warns EU of retaliation over new trade restrictions
Beijing's Commerce Ministry says it will respond if Brussels broadens its tariff measures, as EU leaders weigh new trade tools by year-end.
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China's Commerce Ministry said it would defend Chinese companies and called a broader EU tariff mechanism protectionist, warning Beijing would respond if the EU widens its trade restrictions, Bloomberg reported, via Traders Union.
The warning follows a push by Chancellor Friedrich Merz and President Emmanuel Macron for Brussels to fast-track a new trade instrument that could cut China off from the single market. EU leaders are expected to ask the European Commission to create new trade tools by year-end, including a diversification mechanism to make companies broaden their supplier base and a solidarity mechanism to compensate firms hurt by Chinese retaliation, the South China Morning Post reported, via Global Times. Diplomatic sources expect many EU leaders to back a Franco-German proposal for a 'kill switch' that would quickly remove countries or firms from the EU market over coercive behaviour, according to the same report.
The dispute comes as an earlier truce over hybrid cars has failed to settle the wider argument over Chinese imports. China has refused to accept quotas on its hybrid and plug-in hybrid vehicle exports after Brussels proposed capping Chinese brands' share of the EU hybrid market at about 15%, down from more than a third, the Financial Times reported, via Asia Times.
China's threat of retaliation raises the odds of tit-for-tat measures hitting European exporters just as the EU works separately on diversifying its supply chains, a sign Brussels is preparing for the relationship to worsen rather than expecting a quick resolution. The timing leaves little room for comfort: the bloc is already managing its own budget disputes and warnings over energy affordability, and a fresh trade confrontation with China risks adding pressure to broader eurozone growth expectations.