Germany Supports EU Measures Against China's Trade Practices Amid Economic Strain

Germany has taken a decisive step in supporting new European Union measures against what it describes as China's unfair trade practices. Chancellor Friedrich Merz announced this shift on September 15, highlighting concerns over heavy state subsidies, industrial overcapacity, aggressive pricing strategies, and an undervalued currency.

The trade dynamics have significantly changed, with Germany's trade deficit with China hitting €90 billion in 2025, a stark contrast to the surplus it enjoyed before the pandemic. Imports from China surged to €170.6 billion, while exports remained at €81.3 billion, leading to substantial job losses in the German manufacturing sector.

A recent survey indicated that over half of the 1,300 German firms polled support tougher EU actions against China, even at the risk of facing higher costs or retaliatory measures from Beijing.

Germany is not merely voicing support; it is actively drafting an economic-security package that includes new tariffs on imports such as Chinese plug-in hybrid vehicles, mandatory joint venture requirements, enhanced investment screening, and stricter export controls. This package is expected to receive cabinet approval by October 14.

At the EU level, policymakers are considering an “overcapacity instrument” to counteract market flooding by state-subsidized goods from trading partners. This shift in Germany's stance, long awaited, aligns it with France and the European Commission, marking a significant change in the EU's approach to trade with China.

The implications of these measures could lead to increased costs for sectors reliant on Chinese imports, particularly automotive and industrial machinery, while also reshaping how European companies operate in China.