MediumI Geo-Economics & Chokepoints29 September 2026, Tuesday
China warns of retaliation over trade tool drafted by Germany and France
China's Ministry of Commerce said on the night of 29 September that it would respond resolutely if the EU imposed restrictions on Chinese companies and products. The draft in question envisages an EU tool similar to US Section 301 investigations; Germany and France are reported to have drawn up the text.
According to a Reuters report published by AsiaOne on 30 September, China's Ministry of Commerce issued the statement on the night of Tuesday 29 September. The ministry was reacting to a joint paper reportedly prepared by some EU members. The paper proposes a tool against unfair trade practices similar to the US Section 301. Section 301 is a provision of a 1974 law that empowers Washington to open unilateral investigations and impose tariffs. According to Noah Barkin of Rhodium Group, Germany and France are finalising 1 joint text this week.
Free Malaysia Today reported on 30 September that the ministry described the tool as a protectionist and unilateral measure. According to Chinese state media outlet Global Times, Beijing has 3 countermeasures at its disposal: anti-discrimination investigations, security reviews of industrial and supply chains, and foreign subsidy reviews. The ministry also said that the EU talking while stepping up pressure would damage mutual trust. The draft's content, tariff rate and timetable could not be verified, as neither of the 2 sources gives them.
Talay assessment
Bottom line
The joint German-French text shows the EU is debating a move from product-by-product investigations against China to a broad US-style tool. Beijing citing 3 countermeasures while the text is still a draft suggests it wants to establish deterrence early. The most likely path is for the tool to spend months in negotiations among member states before it becomes a Commission proposal.
Likely effects
- EU–China tradeNegative1–6 months
A 301-style tool would give the Commission broad powers to set tariffs by sector; Chinese retaliation could target European automotive and machinery exports.
- European industryUncertain6 months+
Germany signing the same text as France shows Berlin moving closer to the protectionist line despite industrial interests that depend on the Chinese market.
- TürkiyeUncertain6 months+
If the EU imposes broad tariffs on Chinese goods, Türkiye, inside the customs union, could face trade diversion pressure and also find an opening in supplying the EU.
Possibilities, ranked
- 1Protracted bargaining55%
The joint text is published, but agreement among member states takes months and China confines itself to verbal warnings.
Watch: Publication of the German-French joint text and the Commission's official response
- 2Tit-for-tat investigations30%
China opens a new investigation into EU products, and the tension turns into concrete measures.
Watch: An investigation announcement on EU-origin products from China's Ministry of Commerce
- 3Climbdown15%
EU–China talks make progress, and the proposed tool is shelved.
Watch: A joint statement from EU–China trade talks
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Countries drafting the text▲ 2
- Countermeasures cited by China▲ 3