France and Germany push EU for fast-response tool against trade threats

French President Emmanuel Macron and German Chancellor Friedrich Merz have sent a letter to European Commission President Ursula von der Leyen calling for a new legal instrument that would let the EU react faster to a potential trade war, according to AFP, which has seen the letter.

Although the letter does not name China directly, it was sent shortly before the EU's trade commissioner is due to travel to Beijing to address trade frictions. Macron and Merz argue the Commission needs a credible instrument to act decisively, including the ability to cut off access to the European single market if necessary.

A German government source said such a tool could be used, for instance, if a country halted supplies of critical raw materials. In that case, the EU should be able to inflict damage comparable to what it suffers. The source warned that the United States and China could respond to a trade war faster and more forcefully, while the EU's current tools are not as effective.

Action without approval from all member states

Under the French-German proposal, the Commission could act against trade aggression within days without needing approval from all 27 EU member states, though a weighted majority of states could block such action. Merz and Macron are expected to present their proposal at an EU leaders' summit in Brussels next week.

While the new tool could be applied against any country, the EU's main concern is its trade imbalance with China, which Brussels says is harming key European industries. The EU's goods trade deficit with China reached around 360 billion euros last year. European companies say they are being undercut on price by Chinese competitors in sectors ranging from steel for wind turbines to semiconductors and batteries. The Commission is already developing additional protective tools, including a possible EU equivalent of a US trade-investigation mechanism. Macron and Merz are also seeking a separate tool to reduce Europe's dependency on external suppliers.