Europe and China Edge Toward a Trade War as a Second Export Shock Builds

Pressure is building for a broader trade confrontation between the European Union and China. Iran's state news agency IRNA, citing Western commentary, reported that European anxiety over what some call a second China shock is rising, and that a trade war between Brussels and Beijing has become more likely even as some warn escalation would raise European costs.

The mechanics are straightforward. After United States tariffs on Chinese goods climbed to a trade-weighted average near 47.5 percent, Chinese manufacturers redirected their surplus toward Southeast Asia, Africa and Europe. The Centre for European Reform estimates the resulting export surge could subtract 0.2 to 0.3 percentage points from German growth each year through 2029, as European carmakers compete directly with state-supported Chinese rivals.

That export surplus is also reshaping China's presence abroad. The South China Morning Post reported on how Beijing's role in countries such as Ivory Coast is shifting from builder of megaprojects toward a deeper economic partner.

A weak Chinese domestic economy leaves Beijing dependent on selling its manufacturing surplus abroad, which exports deflation to trading partners and sustains friction wherever those goods are sold.