Germany is wavering on China (again)

Days before EU leaders gather in Brussels to discuss more forceful trade measures against China, the German government is wavering on key elements of the European Commission’s plans, including the use of safeguards to protect struggling European industries from unfair Chinese competition. German Chancellor Friedrich Merz appeared to signal his support for a tougher approach with China when he told the German parliament in a speech last Thursday that his government would not stand idly by while other countries flouted global trade rules. “We will protect our interests and our economy against trade practices by other states that distort competition,” Merz said.

But according to German officials involved in the closed-door discussions that have taken place in Berlin over the past week, Merz’s remarks masked deep reservations in his coalition about the use of hard-hitting trade tools like safeguards to shield ailing sectors like machinery and chemicals. German Economy Minister Katherina Reiche and Merz’s top economic adviser Levin Holle are both skeptical about such measures. Their concerns center around the fact that safeguards would hit other European trading partners besides China and could trigger retaliation from Beijing. Merz has not shown any inclination to overrule Reiche and Holle, though he is determined to avoid the divisions that his predecessor Olaf Scholz created when he lobbied aggressively against EU tariffs on electric vehicles from China in 2024, at the behest of German carmakers.