Germany Signals Tougher EU Trade
Stance to Counter Unfair Competition from China
Country’s ruling coalition agrees on 34-point
package to revive ailing German economy as Chinese imports surge
·
Germany's
ruling coalition has announced a stronger trade defence strategy,
signalling a significant shift from its traditionally cautious approach toward
tougher EU trade measures against China.
·
The new
policy forms part of a 34-point economic revival package unveiled by
Chancellor Friedrich Merz to strengthen Germany's struggling economy.
·
Finance
Minister Lars Klingbeil said Germany would take a firmer stance against
unfair trade practices and growing trade imbalances with China.
·
The
package calls for:
o
Faster
and broader application of EU anti-dumping and anti-subsidy measures.
o
Stronger
action to prevent circumvention of EU trade defence measures.
·
Germany
also supports:
o
Mandatory
technology-transfer requirements for investments from certain non-EU countries in strategic sectors.
o
Stronger
scrutiny of investments in critical infrastructure.
·
The
coalition backed the early adoption of a modified EU Industrial Accelerator
Act and endorsed EU-preference (local content) rules in public
procurement for strategic industries.
·
The
tougher policy comes amid widening trade imbalances:
o
China's
global trade surplus reached a record US$1.19 trillion in 2025.
o
During January–May
2026, China's exports to Germany rose 17.3%, while German exports to
China increased only 1.5%.
·
The
European Union has already strengthened its trade defences by:
o
Reducing
tariff-free steel import quotas.
o
Increasing
out-of-quota steel tariffs to 50% from 1 July 2026.
o
Imposing
a €3 fee on low-value parcels from non-EU online retailers, a move
widely viewed as targeting Chinese e-commerce platforms.
·
Economists
noted that trade protection alone will not restore German industrial
competitiveness.
·
The Kiel
Institute for the World Economy found that only about one-third of
Germany's export market share losses were attributable to China, with the
remainder reflecting domestic competitiveness challenges.
·
Analysts
suggested that, instead of relying solely on tariffs, the EU should deepen
cooperation with free-trade partners to strengthen its bargaining
position in addressing unfair trade practices.
Germany’s
ruling coalition has pledged to take a tougher line on defending trade at the continental
level, signalling a potential shift by a country long seen as the European Union’s
main brake on stronger action against China.
The
pledge formed part of a 34-point package to revive Germany’s ailing economy that
German Chancellor Friedrich Merz’s coalition agreed to on Thursday. While the document
did not mention China, German Finance Minister Lars Klingbeil said the government
was adopting a tougher stance towards Beijing and would protect companies from unfair
trade practices.
“We
do not want trade imbalances of the current magnitude to arise or grow further,”
Merz said while presenting the plans in Berlin.
Juergen
Matthes, head of international economic policy at the German Economic Institute,
described it as “a substantial change of the German position”.
“I
hadn’t expected it to be so clear, so substantial, and so public,” he said.
The
package calls for robust protection against unfair competition, “in particular through
a faster and sector-wide application of anti-dumping and anti-subsidy measures at
European level”, and says any circumvention of those measures must be effectively
prevented.
Matthes
described such duties as “a country-agnostic instrument” to ensure “a level playing
field”, and cited research from the Organisation for Economic Co-operation and Development
to support the argument that China subsidised its industries far more heavily than
other advanced economies.
Beyond
trade defence, the coalition backed mandatory, case-by-case technology-transfer
requirements for investments from certain non-EU countries in strategic sectors
and critical infrastructure – a provision echoing joint venture rules China has
long imposed on foreign carmakers.
It
also backed the swift adoption, “in adapted form”, of
the EU’s proposed Industrial Accelerator Act, along with EU-preference rules in
public funding for strategic industries.
Klingbeil
underlined the point in Berlin, saying: “In strategically important areas such as
infrastructure or defence, we are relying on European production – that is, local
content.”
The
tougher stance follows China’s record global trade surplus of US$1.19 trillion last
year. In the first five months of 2026, China’s exports to Germany rose 17.3 per
cent year on year, while Chinese imports from Germany edged up just 1.5 per cent,
according to Chinese customs data.
Brussels
has been tightening its trade defences in response. From July 1, the EU cut tariff-free
steel import quotas and doubled the out-of-quota duty to 50 per cent. It also began
charging a flat €3 (US$3.50) fee on low-value parcels from non-EU online retailers,
a measure widely seen as targeting Chinese platforms such as Shein and Temu.
Some
economists cautioned that tougher trade policy alone would not revive German industry.
In
a report last month, German think tank the Kiel Institute found only about one-third
of Germany’s market share losses in third-party markets could be traced to China,
with the rest reflecting competitiveness problems “made at home”. It warned that
“blanket tariffs are poorly matched to the problem”.
Rolf
Langhammer, a former vice-president of the institute, wrote last month that a European
measure modelled on Section 301 of the United States’ Trade Act, which targets unfair
foreign trade practices, “would offer only temporary protection of the status quo”.
Instead, he urged the EU to build leverage against China by linking up with free-trade
partners facing similar challenges.