Story perspectives

EU Prepares Tougher China Policy, Warns of Retaliation

4/28/2026

Summary

EU Debates China

EU Commissioners will debate a new China strategy on 29 May, signalling a shift toward tougher measures.
China’s Ministry of Commerce warned it could retaliate against the EU’s Made in Europe law that tightens foreign-direct-investment rules.
The European Commission is readying the Anti-Coercion Instrument, which could impose tariffs or IP restrictions after China’s rare-earth export controls.

Summary

EU Defends IAA

Inflation Reduction Act (IAA) aims to lift manufacturing’s share of EU GDP from 14.3 % to 20 % by 2035.
China says act breaches WTO accords, naming GATT 1994, TRIMs, TRIPS, Subsidies and Countervailing Measures Agreement.
On 24 April, Beijing urged the EU to scrap local-content, IP transfer and technology-sharing clauses.
EU trade commissioner Maroš Šefcovic said the EU will seek to reopen the WTO’s MFN principle so “Made in Europe” rules comply with commitments.

History

Historical Context

When the WTO began on 1 January 1995, it replaced GATT and bound the European Union and China under a rules-based trade system. With 166 members covering more than 98 % of world trade, its dispute-settlement mechanism has been the primary way to enforce agreements. The EU’s new anti-coercion proposal therefore tests the WTO framework that China now disputes.

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EU Debates China

EU Commissioners will debate a new China strategy on 29 May, signalling a shift toward tougher measures.
China’s Ministry of Commerce warned it could retaliate against the EU’s Made in Europe law that tightens foreign-direct-investment rules.
The European Commission is readying the Anti-Coercion Instrument, which could impose tariffs or IP restrictions after China’s rare-earth export controls.

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