Are Europe and China heading for a trade war?

Escalating trade tensions between the European Union and China center on accusations of Chinese industrial overcapacity and unfair state subsidies, particularly in the electric vehicle and green technology sectors. European industries, including German automotive and Italian machine tools, face significant pressure as Chinese exports surge, prompting calls for protective trade measures. While EU officials and analysts like Brad Setzer highlight the distortive effects of state-backed production, Chinese representatives like Henry Huiyao Wang argue that these exports reflect genuine innovation and market demand. The conflict presents a complex political challenge for Brussels, which must weigh the necessity of shielding domestic manufacturing against the risk of retaliatory trade barriers. As the EU prepares to potentially implement new policies in October, the prospect of a broader trade war looms, threatening to disrupt global supply chains and economic stability.