EU retools Trump trade war tripwire into China shipments surge alarm

The bloc was concerned that Chinese shipments bound for the United States would be diverted to Europe at lower prices, imperilling local manufacturers.

The intelligence it gathers could help Brussels decide where to strike when it comes to restricting Chinese goods, Denis Redonnet, the EU’s top trade enforcer, said on Thursday.

The scale of the warning is striking. Redonnet, who is also the point person for trade policy on China, told lawmakers that the system was detecting “potentially worrying trends for almost a quarter of all imports into the EU”, with China the main driver.

Results of the so-called import barometer published last week flagged 902 individual product categories in which imports were rising unusually quickly while prices were falling.

Machinery was the biggest segment, with 141 product lines flagged, followed by textiles with 116, basic metals with 110 and chemicals with 107. The analysis covered the year to June.

These are also among the sectors in which the EU has or is considering opening safeguard investigations, which would allow it to quickly impose tariffs and quotas in instances of harmful import surges, with Redonnet confirming that the tool could help identify cases for such action.

“There are sectors now, important sectors of our economy, facing sustained and abnormal import increases,” he told the European Parliament’s trade committee.

“There might be cases where we might envisage an ex officio trigger of safeguard investigation,” Redonnet said, meaning Brussels could launch a case without waiting for industry or a member state to request one. “I cannot exclude it, nor am I announcing it either.”

02:41

EU leaders debate new China trade policy over ‘systemic threat’

The comments come as Brussels considers new weapons to deal with the surges in imports identified by the barometer. Several sources confirmed that the commission was considering an instrument that would permit it to raise tariffs on goods when imports from China or another dominant trading partner hit a certain level in key sectors.

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This “overcapacity instrument” comes on top of a new diversification tool, set to be proposed in December, which would compel firms to broaden their pools of suppliers beyond a single country.

On Wednesday, the commission called for evidence for this mechanism, confirming that it would “present a diversification package aimed at supporting faster supply chain diversification and reducing dependencies in critical sectors”.

Beijing has threatened to retaliate against any such measures, particularly any tool that would mirror the US’ Section 301 tariff platform.

“If the EU engages in dialogue and consultation with China on the one hand while ratcheting up a show of strength against China on the other, this will seriously damage mutual trust, disrupt the overall consultation process and affect the broader picture of China-EU economic and trade cooperation,” the Ministry of Commerce said on Tuesday.

EU leaders, meanwhile, are gearing up for a crucial debate on China at the European Council summit this month – just a week after EU trade chief Maros Sefcovic travels to Beijing for meetings with his counterpart, Wang Wentao.

11:24

How does Trump’s latest fallout with traditional allies play into Beijing’s hands?

On Wednesday, the political leaders of France and Spain discussed China policy in Madrid. Paris has been a strong advocate of forceful trade action while Spain has grown closer to Beijing in recent years. Nonetheless, the sides downplayed their differences on the matter.

“We must protect European industry much better, much faster … from October, we are going to put this into practice,” French President Emmanuel Macron said at a press conference, alongside Spanish Prime Minister Pedro Sanchez.

The French leader accused Beijing of “massively dumping just to kill the players in a sector and take over the whole sector” and of “massacring our industrial base”.

Sanchez said the two countries were “not so far apart” on China policy. “On the contrary, it has to be common across Europe as a whole because our objective is the same,” he said.

Sanchez described China’s trade surplus as “not acceptable and cannot be borne by any economy”, but cautioned that the EU must pursue “cooperation wherever possible, competition whenever necessary, and the constructive management of disagreements”.