EU Imposes New Import Restrictions on Chinese Goods

The contraction in European industry and deepening competitive pressure are driving the Brussels administration to take comprehensive measures against the influx of cheap Asian-origin products. The European Union is preparing new safeguard measures to narrow the deficit in its trade balance with China, which has reached $404 billion, and to protect domestic producers.

Which sectors is the European Union preparing restrictions on?

Under the prepared plan, direct restrictions are targeted on imports of chemicals, furniture, and machinery from China. European Commission President Ursula von der Leyen stated that they will respond to urgent calls for protection from industrial sectors, noting that new safeguard mechanisms will be introduced. While Brussels plans to set an upper price limit (limit-up) on Chinese-made hybrid vehicles in December to stem the bleeding in the automotive sector, layoff plans involving tens of thousands of workers by giants such as Volkswagen demonstrate the scale of the pressure being applied.

What could the Beijing administration's retaliatory steps be?

While Nomura analysts point out that elections across Europe over the next 1.5 years could shift to the right, the potential costs of escalating trade tensions are also being evaluated. EU Trade Chief Maroš Šefčovič is scheduled to meet with his Chinese counterparts in the first months of next year. According to the framework shared by Deutsche Bank analyst Marion Muehlberger, if Brussels implements customs tariffs and import restrictions, there is a risk that Beijing could restrict shipments of permanent magnets and critical rare earth elements.

This content is for information purposes only and does not constitute investment advice.